UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No.)
Filed by
the Registrant ý
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨ Preliminary Proxy
Statement
¨ Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy
Statement
¨ Definitive Additional
Materials
¨ Soliciting Material
Pursuant to §240.14a-12
Pacific
Premier Bancorp, Inc.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
ýNo fee
required.
¨ Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title
of each class of securities to which transaction applies:
________________________________________________________________________
(2)
Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it
was
determined):
________________________________________________________________________
(4)
Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total
fee paid:
¨ Fee paid previously
with preliminary materials.
¨ Check box if any part
of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
the
filing
for which the offsetting fee was paid previously. Identify the previous filing
by registration
statement
number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
________________________________________________________________________
(2) Form,
Schedule or Registration Statement No.:
________________________________________________________________________
(3)
Filing Party:
________________________________________________________________________
(4) Date
Filed:
________________________________________________________________________
1600
Sunflower Avenue
Costa
Mesa, California 92626
714-431-4000
April 17,
2009
Fellow
Shareholders:
On behalf
of the Board of Directors and management of Pacific Premier Bancorp, Inc. (the
“Company”), you are cordially invited to attend the Annual Meeting of
Shareholders of the Company (“Annual Meeting”). The Annual Meeting will be held
on Wednesday, May 27, 2009, at 9:00 a.m., Pacific Time, at the Company’s
corporate headquarters located at 1600 Sunflower Avenue, Costa Mesa, California
92626.
An
important aspect of the Annual Meeting is the shareholder vote on corporate
business items. The attached Notice of the Annual Meeting and Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and officers of the Company will be present at the Annual Meeting to respond to
any questions that you may have regarding the business to be
transacted.
The Board
of Directors of the Company has determined that the matters to be considered at
the Annual Meeting are in the best interest of the Company and its shareholders.
For the reasons set forth in
the Proxy Statement, the Board of Directors unanimously recommends that you vote
“FOR” the director nominees specified under Item 1 and “FOR” the appointment of
Vavrinek, Trine, Day & Co., LLP as the independent auditors of the Company
for the fiscal year ended December 31, 2009 specified under Item
2.
We
encourage you to attend the Annual Meeting in person if it is convenient for you
to do so. If you are unable to attend, it is important that vote via Internet,
telephone or sign, date and return the enclosed proxy card in the enclosed
postage-paid envelope. Your cooperation is appreciated since a majority of the
common stock must be represented, either in person or by proxy, to constitute a
quorum for the transaction of business.
On behalf
of the Board of Directors and all of the employees of Pacific Premier Bancorp,
Inc., we thank you for your continued support.
Best
Regards,
Steven R. Gardner
President
and Chief Executive Officer
PACIFIC
PREMIER BANCORP, INC.
1600
Sunflower Avenue
Costa
Mesa, California 92626
714-431-4000
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held May 27, 2009
NOTICE IS
HEREBY GIVEN that the Annual Meeting of the Shareholders (“Annual Meeting”) of
Pacific Premier Bancorp, Inc. (the “Company”) will be held on
Wednesday, May 27, 2009 at 9:00 a.m., Pacific Time, at the Company’s corporate
headquarters located at 1600 Sunflower Avenue, Costa Mesa, California, to
consider and act upon the following matters:
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1.
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To
elect two (2) directors, each for a three-year term, or until their
successors are elected and
qualified;
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2.
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To
ratify the appointment of Vavrinek, Trine, Day & Co., LLP as the
Company’s independent auditor for the fiscal year ended December 31, 2009;
and
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3.
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To
transact such other matters as may properly come before the meeting and at
any adjournments thereof, including whether or not to adjourn the
meeting. Management is not aware of any other such
business.
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The Board
of Directors has fixed March 31, 2009 as the record date for determination of
shareholders entitled to receive notice of and to vote at the Annual Meeting and
any adjournment thereof. Only those shareholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting or at any
such adjournment.
By Order of the Board
of Directors,
John
Shindler
Corporate
Secretary/EVP/CFO
Costa Mesa,
California
April 17,
2009
IMPORTANT: Whether or not you
expect to attend the Annual Meeting, we urge you to vote your proxy at your
earliest convenience via the Internet, by telephone or by mail by either (i)
using the enclosed postage-paid reply envelope if you received printed proxy
materials or (ii) requesting printed materials and using the paid reply
enveloped delivered to you if you initially did not receive printed materials.
This will ensure the presence of a quorum at the Annual Meeting and will save
Pacific Premier Bancorp, Inc. the expense of additional solicitation. Submitting
your proxy will not prevent you from voting your shares in person at the Annual
Meeting if you desire to do so. Your proxy is revocable at your option in the
manner described in the Proxy Statement.
NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 27, 2009.
The proxy
materials for this Annual Meeting of Shareholders are available over the
Internet at www.proxyvote.com.
Table
of Contents
PACIFIC
PREMIER BANCORP, INC.
1600
Sunflower Avenue
Costa
Mesa, California 92626
_________________________________
PROXY
STATEMENT
For
2009 Annual Meeting of Shareholders
To
Be Held on Wednesday, May 27, 2009
Our Board of
Directors is soliciting proxies to be voted at our 2009 Annual Meeting of
Shareholders (“Annual Meeting”) on May 27, 2009, at 9:00 a.m., Pacific Time, and
at any adjournments or postponements thereof, for the purposes set forth in the
attached Notice of Annual Meeting of Shareholders (the “Notice”).
As
permitted by rules adopted by the Securities and Exchange Commission (“SEC”), we
are making this proxy statement and our annual report for the year ended
December 31, 2008, available to our shareholders electronically via the
Internet. On April 17, 2009, we mailed to our U.S. shareholders
as of the record date for the Annual Meeting, or March 31, 2009, a notice
containing instructions on how to access this proxy statement and our annual
report online and to vote your shares at the Annual Meeting. Also on April 28,
2009, we began mailing printed copies of these proxy materials to shareholders
that have requested printed materials. If you received a notice by mail, you
will not receive a printed copy of the proxy materials in the mail unless you
request a copy as indicated below. Instead, the notice instructs you on how to
access and review online all of the important information contained in the proxy
statement and annual report. The notice also instructs you on how you may submit
your proxy over the Internet. If you received a notice by mail and would like to
receive a printed copy of our proxy materials, you should follow the
instructions for requesting such materials included in the notice and as
indicated below.
As
used in this Proxy Statement, the terms “Company,” “we,” “us” and “our” refer to
Pacific Premier Bancorp, Inc., the term “Bank” refers to Pacific Premier Bank
and the terms “Board of Directors” and “the Board” refers to the Board of
Directors of the Company.
_________________________________
Question: Why am I receiving these
materials?
Answer: Our Board of Directors
is providing these proxy materials to you in connection with the Annual Meeting,
to be held on May 27, 2009. As a shareholder, you are invited to attend our
Annual Meeting, and are entitled to and requested to vote on the items of
business described in this Proxy Statement.
Question: What information is contained in
this Proxy Statement?
Answer: This information
relates to the proposals to be voted on at our Annual Meeting, the voting
process, compensation of our directors and most highly paid executives, and
certain other required information.
Question: Can I access the Company’s proxy
materials and annual report electronically?
Answer:
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to Be Held on May 27, 2009. The
proxy statement and annual report are available at www.proxyvote.com.
To view
this material, you must have available the 12-digit control number located on
the notice mailed on April 17, 2009 or the proxy card or, if shares are
held in the name of a broker, bank or other nominee, the voting instruction
form.
Question: Who is soliciting my vote pursuant
to this Proxy Statement?
Answer: Our Board of Directors
is soliciting your vote at our Annual Meeting.
Question: Who is entitled to
vote?
Answer: Only shareholders of
record at the close of business on March 31, 2009 (the “Record Date”) will be
entitled to vote at our Annual Meeting.
Question: How many shares are eligible to be
voted?
Answer: As of the Record Date,
we had 4,803,451 shares of common stock outstanding. Each outstanding share of
our common stock will entitle its holder to one vote on each of the two (2)
directors to be elected and one vote on each other matter to be voted on at our
Annual Meeting.
Question: What am I voting
on?
Answer: You are voting on the
following matters:
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The
election of two (2) directors. Our nominees are John D. Goddard and David
L. Hardin.
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Ratification
of the appointment of Vavrinek, Trine, Day & Co., LLP (“VTD”) as the
Company’s independent auditor for
2009.
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Question: How does our Board of Directors
recommend that I vote?
Answer: Our Board recommends
that you vote “FOR” each director nominee and “FOR” the ratification of
the
appointment
of VTD as independent auditor.
Question: How many votes are required to hold
the Annual Meeting and what are the voting procedures?
Answer: Quorum Requirement:
As of the Record Date, 4,803,451 shares of the Company’s common stock were
issued and outstanding. A majority of the outstanding shares, present or
represented by proxy, constitutes a quorum for the purpose of adopting proposals
at the Annual Meeting. If you submit a properly executed proxy, then you will be
considered part of the quorum.
Required Votes: Each
outstanding share of our common stock is entitled to one vote on each proposal
at the Annual Meeting, subject to the limitation in our certificate of
incorporation, as amended, that provides that record holders of our common stock
who beneficially own in excess of 10% of our outstanding shares of common stock
are not entitled to vote in respect to the shares held in excess of this voting
limitation (the “Voting Limit”).
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Election of Directors:
If there is a quorum at our Annual Meeting, the two (2) nominees
who receive the greatest number of votes cast for directors will be
elected. There is no cumulative voting for our
directors.
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Ratification of Independent
Auditors: If there is a quorum, this proposal will be approved if
the number of votes cast in favor of the proposed action exceeds the
number of votes cast against it.
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If there
is a quorum at the Annual Meeting, abstentions and broker non-votes will have no
impact on the election of directors or the approval of the other proposed
actions at the meeting.
Question: How may I cast my
vote?
Answer: If you are the
shareholder of record, you may vote by one of the following four methods (as
instructed on the enclosed proxy card):
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in
person at the Annual Meeting,
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via
the Internet,
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by
telephone, or
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by
mail.
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If you
would like to vote in person at the Annual Meeting and would like to obtain
directions to the Annual Meeting please contact Investor Relations, Pacific
Premier Bancorp, Inc., 1600 Sunflower Avenue, Costa Mesa, California 92626 at
(714) 431-4000.
If you
elect to vote by mail and you received a printed proxy card, you may mark, sign,
date and mail the proxy card you received from us in the return
envelope. If you did not receive a printed proxy card and wish to
vote by mail, you may do so by requesting a paper copy of the proxy materials
(as described below), which will include a proxy card.
Whichever
method of voting you use, the proxies identified on the proxy card will vote the
shares of which you are the shareholder of record in accordance with your
instructions. If you submit a proxy card without giving specific voting
instructions, the proxies will vote the shares as recommended by our Board of
Directors.
If you
own your shares in “street name,” that is, through a brokerage account or in
another nominee form, you must provide instructions to the broker or nominee as
to how your shares should be voted. Your broker or nominee will usually provide
you with the appropriate instruction forms at the time you receive this Proxy
Statement and our Annual Report. If you own your shares in this manner, you
cannot vote in person at the Annual Meeting unless you receive a proxy to do so
from the broker or the nominee, and you bring the proxy to our Annual
Meeting.
Question: How may I cast my vote over the
Internet or by telephone?
Answer: Voting over the
Internet: If you are a shareholder of record, you may use the Internet to
transmit your vote up until 11:59 P.M. Eastern Time May 26, 2009. Visit www.voteproxy.com and have
your proxy card in hand when you access the website and follow the instructions
to obtain your records and to create an electronic voting instruction
form.
Voting by Telephone:
If you are a shareholder of record, you may call 1-800-776-9437 and use any
touch-tone telephone to transmit your vote up until 11:59 P.M. Eastern Time May
26, 2009. Have your proxy card in hand when you call and then follow the
instructions.
If you
hold your shares in “street name,” that is through a broker, bank or other
nominee, that institution will instruct you as to how your shares may be voted
by proxy, including whether telephone or Internet voting options are
available.
Question: How may a shareholder nominate
someone at the Annual Meeting to be a director or bring any other business
before the Annual Meeting?
Answer: The Company’s bylaws
require advance notice to the Company if a shareholder intends to attend an
annual meeting of shareholders in person and to nominate someone for election as
a director or to bring other business before the meeting. Such a notice may be
made only by a shareholder of record within the time period established in the
bylaws and described in each year’s Proxy Statement.
Question: How may I revoke or change my
vote?
Answer: If you are the record
owner of your shares, and you completed and submitted the proxy card you may
revoke your proxy at any time before it is voted at the Annual Meeting
by:
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submitting
a new proxy card,
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delivering
written notice to our Secretary prior to May 27, 2009, stating that you
are revoking your proxy, or
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attending
the Annual Meeting and voting your shares in
person.
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If you
are a record owner of your shares and you submitted your proxy by telephone or
via the Internet, you may change your vote or revoke your proxy with a later
telephone or Internet proxy, as the case may be.
Please
note that attendance at the Annual Meeting will not, in itself, constitute
revocation of your proxy.
Question: Who is paying for the costs of this
proxy solicitation?
Answer: Our Company will bear
the cost of preparing, printing and mailing the materials in connection with
this solicitation of proxies. In addition to mailing these materials, officers
and regular employees of our Company may, without being additionally
compensated, solicit proxies personally and by mail, telephone, facsimile or
electronic communication. We have retained American Stock Transfer & Trust
Co. to assist in the solicitation at a cost of approximately $3,500, plus
payment of reasonable out-of-pocket expenses incurred by American Stock Transfer
& Trust Co.
Question: Who will count the
votes?
Answer: American Stock
Transfer & Trust Co., our inspector of elections for the Annual Meeting,
will receive and tabulate the ballots and voting instruction forms.
Question: What happens if the Annual Meeting
is postponed or adjourned?
Answer: Your proxy will still
be effective and may be voted at the rescheduled meeting. You will still be able
to change or revoke your proxy until it is voted.
Question: How can I obtain the Company’s
Corporate Governance information?
Answer: Our Company’s
Corporate Governance information is available on our website at www.ppbi.com/ir. Our shareholders may
also obtain written copies at no cost by writing to us at 1600 Sunflower Avenue,
Costa Mesa, California 92626, Attention: Investor Relations Department, or by
calling (714) 431-4000.
Question: How do I request
electronic or printed copies of this and future proxy
materials?
Answer: You may request and
consent to delivery of electronic or printed copies of future proxy statements,
annual reports and other shareholder communications by (i) visiting www.proxyvote.com,
(ii) calling 1-800-579-1639, or (iii) sending an email to sendmaterial@proxyvote.com. You
must have available the 12-digit control number described above.
Our Annual Meeting will be held at 9:00
a.m., Pacific Time, on Wednesday, May 27, 2009, at Pacific Premier Bancorp,
Inc.’s corporate headquarters located at 1600 Sunflower Avenue, Costa Mesa,
California 92626.
The Company’s
Board of Directors has nominated each of the following persons for election as a
director. Each nominee is currently a director of the Company and each has
indicated that he is willing and able to continue to serve as a director. We
have provided biographical and other information on each of the nominees
beginning on page 4 of this Proxy Statement.
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John
D. Goddard
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David
L. Hardin
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If any
nominee becomes unable or unwilling to serve, which is not anticipated, the
accompanying proxy may be voted for the election of such other person as shall
be designated by the Nominating and Corporate Governance (“Nominating
Committee”) of our Board of Directors. Proxies granted may not be
voted for a greater number of nominees than the two (2) named above. Unless
instructions to the contrary are specified in a proxy properly voted and
returned through available channels, the proxies will be voted FOR
each of the nominees listed above.
OUR
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE
“FOR” EACH OF THE NOMINEES.
Below is
information regarding each of our nominated directors, each of whom has been
nominated for re-election at the Annual Meeting.
John D. Goddard, 70,
has served as a director for the Company since 1988. Mr.
Goddard has been a Certified Public Accountant for the past 43 years. Mr.
Goddard was initially employed by W.C. Brassfield, CPA from 1962 to
1965. He formed the partnership, Brassfield and Goddard, CPAs in 1965
and continued practicing there until September 1976. The firm incorporated into
Goddard Accountancy Corporation, CPAs where Mr. Goddard practiced and served as
President from September 1976 until December 2003. The corporation merged with
the firm of Soren McAdam Christenson, LLP in January 2004. Mr. Goddard retired
on January 1, 2008 from full-time practice as a CPA and now works part-time on a
consulting basis.
David L. Hardin, 55,
began serving as a director for the Company in April 2007. In March 2008,
Mr. Hardin resigned as a director to pursue other professional
activities. In August 2008, Mr. Hardin was again appointed as a
director. Mr. Hardin has been the President and Chief Executive
Officer of HRE Mortgage, Inc., the parent company of Covenant Mortgage which was
founded in 2004. Additionally, he is Chief Executive Officer of Elite
Construction Group which was founded in late 2006 and Chief Executive Officer of
Covenant Debt Solutions, Inc. which was founded in 2008. Prior to that, Mr.
Hardin was Executive Vice President/Chief Banking Officer of Hawthorne Savings
from 1993 to 2003. Mr. Hardin has served in management positions in
retail banking, lending production and operations as well as sitting on various
management loan committees, including serving as an executive at World Savings,
Columbia Savings, Valley Federal Savings and Downey Savings. Mr. Hardin holds a
B.A. from California State University, Fullerton.
Steven R. Gardner, 48, has
been the President and Chief Executive Officer of the Company and the Bank since
the third quarter of 2000, and has served as a director of the Company since
2000. Prior to joining us in February 2000 as Chief Operating Officer, Mr.
Gardner was Senior Vice President of Lending at Hawthorne Savings since 1997.
Mr. Gardner has served in management positions in credit administration,
portfolio management, lending production and operations as well as risk
management for the past 23 years. Mr. Gardner holds a B.A. from
California State University, Fullerton and attended graduate school at
California State University, Long Beach.
Jeff C. Jones, 54,
has served as a member of the Company’s Board since July
2006. Mr. Jones is the past Managing Partner and current Executive
Committee member of, and partner in, the regional accounting firm Moore Stephens
Wurth Frazer and Torbet, LLP, which he has been with since 1977. Mr. Jones has
over 29 years of experience in servicing small and medium sized business clients
primarily within the real estate, construction, and agricultural industries. Mr.
Jones is a past president of Inland Exchange, Inc, an accommodator corporation
and has served on the Board of Directors of Moore Stephens North America, Inc.
Mr. Jones holds a B.S. in Business Administration from Lewis and Clark College
in Portland, Oregon, and a Masters of Business Taxation from Golden Gate
University. Mr. Jones is a CPA in California and licensed as a life insurance
agent and holds a Series 7 securities license.
Kenneth A. Boudreau,
59, has served as a member of the Company’s Board since 2005.
Mr. Boudreau is Vice President of Coast Composites, Inc., a manufacturing
concern in Irvine, California. He joined the company in 2008 after a 12-year
career with M. C. Gill Corporation, a manufacturing concern in El Monte,
California, where he last served as President and Chief Executive Officer.
Mr. Boudreau joined M. C. Gill Corporation in 1996 as its Chief
Financial Officer, assumed progressive responsibilities over time, and was named
President and Chief Executive Officer in 2002. Mr. Boudreau had previously
been employed by The Quikset Organization in Irvine, California for 15 years
where he was initially hired as their controller and advanced to lead their
subsidiaries with $40 million in revenue. Mr. Boudreau is a CPA in
California, and was employed by Deloitte & Touche before joining The Quikset
Organization. He obtained his B.A. in Business Administration from
California State University, Fullerton.
Michael L. McKennon,
48, has served as a director of the Company since 2004 and currently
chairs our Audit Committee. Mr. McKennon is a partner with the Newport Beach
public accounting firm of dbbmckennon, a registered firm of the Public Company
Accounting Oversight Board (PCAOB). Prior thereto, Mr. McKennon was a founding
partner of the Irvine, California accounting firm of McKennon Wilson &
Morgan LLP, a registered firm of the PCAOB. Mr. McKennon, a CPA in the state of
California and Nevada, has been responsible for audit and accounting practices
since 1998 in these firms. Mr. McKennon was previously employed by the
accounting firm of PricewaterhouseCoopers LLP and Arthur Andersen & Co. Mr.
McKennon has 26 years experience in private and public accounting, auditing and
consulting in Southern California. He obtained his B.A. degree in Business
Administration from California State University, Fullerton.
Ronald G. Skipper,
67, has been Chairman of the Board of the Company since 1997 and a member
of the Company’s Board since 1983. Mr. Skipper is a self-employed attorney and
has been practicing law for 35 years. Mr. Skipper also serves on the Board of
Directors of Stater Bros. Markets Corporation, a supermarket company. He is
general counsel to the National Orange Show Board of Directors of San Bernardino
County, California and has served on numerous boards of directors, including The
University of California, Hastings College of Law 1066 Foundation, California
State University, San Bernardino Foundation and St. Bernadine’s Hospital
Foundation.
John Shindler,
53, Executive Vice
President/Chief Financial Officer and Treasurer , was hired in
December 2000 as Controller and promoted Chief Financial Officer in
the third quarter of 2002. Mr. Shindler serves as Chairman of our Asset
Liability Committee. Prior to joining the Bank, Mr. Shindler worked as a
division controller for IXL, an Internet solution company, for approximately a
year. Prior to that, Mr. Shindler worked for Long Beach Acceptance Corp., an
indirect auto lender, for more than three years, where he started as a division
controller and then was promoted to Regional Vice President of Operations. Mr.
Shindler has 15 years of experience as controller or treasurer of various
companies, 13 of which were spent at financial institutions prior to joining the
Bank. Mr. Shindler obtained his M.B.A. and B.S. from California State
University, Hayward.
Edward Wilcox, 42,
Executive Vice President/Chief Banking Officer – was hired in August 2003
as the Bank’s Senior Vice President and Chief Credit Officer. In
September 2004, Mr. Wilcox was promoted to Executive Vice President
and was responsible for overseeing loan and deposit production. In the fourth
quarter of 2005, Mr. Wilcox was promoted to Chief Banking Officer and assumed
responsibility of the branch network. Prior to joining us, Mr. Wilcox served as
Loan Production Manager at Hawthorne Savings for two years and as the Secondary
Marketing Manager at First Fidelity Investment & Loan for five years. Mr.
Wilcox has an additional nine years of experience in real estate banking
including positions as Asset Manager, REO Manager and Real Estate Analyst at
various financial institutions.
We value
strong corporate governance principles and adhere to the highest ethical
standards. These principles and standards, along with our core values of
fairness and caring, assist us in achieving our corporate mission. To foster
strong corporate governance and business ethics, our Board of Directors
continues to take many steps to strengthen and enhance our corporate governance
practices and principles. To that end, we have adopted Corporate Governance
Guidelines to achieve the following goals:
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to
promote the effective functioning of the Board of
Directors;
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to
ensure that the Company conducts all of its business in accordance with
the highest ethical and legal standards;
and
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to
enhance shareholder value.
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The full
text of our Corporate Governance Guidelines is available on our website at www.ppbi.com/ir. Our
shareholders may also obtain a written copy of the guidelines at no cost by
writing to us at 1600 Sunflower Avenue, Costa Mesa, California 92626, Attention:
Investor Relations Department, or by calling (714) 431-4000.
The
Nominating and Corporate Governance Committee (the “Nominating Committee”) of
our Board of Directors administers our Corporate Governance Guidelines, reviews
performance under the guidelines and the content of the guidelines annually and,
when appropriate, and recommends updates and revisions to our Board of
Directors.
Board of Directors
Independence
The Board
of Directors of the Company and the Bank is made up of seven (7)
directors. The directors are divided into three
classes. Directors are elected for staggered terms of three years and
serve until their successors are elected and qualified. Our Corporate Governance
Guidelines require that the Board consist predominantly of non-management
directors. This means directors who are not currently, and have not been,
employed by us during the most recent three years. Currently, our Chief
Executive Officer is our only director who is also a member of
management.
Our
Corporate Governance Guidelines require that a majority of the Board of
Directors consist of independent directors as defined under the Nasdaq Stock
Market (the “Nasdaq”) rules. No director will be “independent” unless the Board
affirmatively determines that the director meets the categorical standards set
forth in the Nasdaq rules and otherwise has no relationship with the Company
which, in the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director and has
no material relationship with the Company (either directly or as a partner,
shareholder or officer of an organization that has a relationship with the
Company).
Our
Nominating Committee is responsible for reviewing with the Board annually the
appropriate criteria and standards for determining director independence
consistent with the Nasdaq rules. In 2008, the Company’s Board determined that
Kenneth A. Boudreau, John D. Goddard, Jeff C. Jones, Michael L. McKennon, David
L. Hardin, and Ronald G. Skipper are independent and have no material
relationships with the Company.
In
connection with its review, the Board examined certain relationships between Mr.
McKennon and the Company, in particular, the three loans his partnership has
with the Bank, and determined that the relationships were
immaterial.
Responsibilities of the
Board of Directors
In
addition to each director’s basic duties of care and loyalty, the Company’s
Board of Directors has separate and specific obligations enumerated in our
Corporate Governance Guidelines. Among other things, these obligations require
directors to effectively monitor management’s capabilities, compensation,
leadership and performance, without undermining management’s ability to
successfully operate the business. In addition, our Board and its committees
have the authority to retain and establish the fees of outside legal, accounting
or other advisors, as necessary to carry out their
responsibilities.
Our
directors are expected to avoid any action, position or interest that conflicts
with an interest of the Company, or gives the appearance of a conflict. As a
result, our directors must disclose all business relationships with the Company
and with any other person doing business with us to the entire Board and to
recuse themselves from discussions and decisions affecting those relationships.
We periodically solicit information from directors in order to monitor potential
conflicts of interest and to confirm director independence.
Communication With
Directors
Individuals
may submit communications to any individual director, including our presiding
Chairman, our Board of Directors as a group, or a specified Board committee or
group of directors, including our non-management directors, by sending the
communications in writing to the following address: Pacific Premier Bancorp,
Inc., 1600 Sunflower Avenue, Costa Mesa, California 92626. All correspondence
should indicate to whom it is addressed. The Company’s Corporate Secretary will
sort the Board correspondence to classify it based on the following categories
into which it falls: shareholder correspondence, commercial correspondence,
regulator correspondence or customer correspondence. Each classification of
correspondence will be handled in accordance with a policy unanimously approved
by the Board.
Director Nomination
Process
Our
Nominating Committee is responsible for reviewing with the Board of Directors
annually the appropriate skills and characteristics required of our Board
members, and for selecting, evaluating and recommending nominees for election by
our shareholders. The Nominating Committee has authority to retain a third-party
search firm to identify or evaluate, or assist in identifying and evaluating,
potential nominees if it so desires, although it has not done so to
date.
In
evaluating nominees for director, the Nominating Committee considers such other
relevant factors as it deems appropriate, including the current composition of
the Board, the need for Audit Committee expertise, and the director
qualification guidelines set forth in the Company’s Corporate Governance
Policy. In connection with this evaluation, the Nominating Committee
determines whether to interview the prospective nominee, and if warranted, one
or more members of the Nominating Committee, in concert with the Company’s Chief
Executive Officer, interviews prospective nominees. After completing its
evaluation, the Nominating Committee makes a recommendation to the full Board as
to the persons who should be nominated by the Board, and the Board determines
the nominees after considering the recommendation and report of the Nominating
Committee.
Our
shareholders may propose director candidates for consideration by the Company’s
Nominating Committee by submitting the individual’s name and qualifications to
our Secretary at 1600 Sunflower Avenue, Costa Mesa, CA 92626. Our Nominating
Committee will consider all director candidates properly submitted by our
shareholders in accordance with our bylaws and Corporate Governance Guidelines.
Shareholders who wish to nominate candidates for election to our Board at our
Annual Meeting of Shareholders must follow the procedures outlined in
“Shareholder Proposals for the 2010 Annual Meeting” set forth
below.
Board Meetings and Executive
Sessions
Our Board
of Directors currently holds twelve full Board meetings each year. All of our
directors are encouraged to attend each meeting in person. Our management
provides all directors with an agenda and appropriate written materials
sufficiently in advance of the meetings to permit meaningful review. Any
director may submit topics or request changes to the preliminary agenda as he or
she deems appropriate in order to ensure that the interests and needs of
non-management directors are appropriately addressed. To ensure active and
effective participation, all of our directors are expected to arrive at each
Board and committee meeting having reviewed and analyzed the materials for the
meeting. During 2008, our Board of Directors met twelve times, and
all of our directors attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors held during his tenure in office during
the last fiscal year and the total number of all meetings held by all committees
of the Board of Directors on which he served during such year.
It is the
Company’s policy that the independent directors of the Company meet in executive
sessions without management at least twice on an annual basis in conjunction
with regularly scheduled board meetings. Executive sessions at which
the independent directors meet with the Chief Executive Officer also may be
scheduled. During 2008, the independent directors met twice in
executive session without the presence of management.
Director Attendance at
Company Annual Meetings
All of
our directors are encouraged to attend every Company annual meeting of
shareholders. All of our directors attended our prior annual meeting
of shareholders.
Director Contact with
Management
All of
our directors are invited to contact our Chief Executive Officer and or any of
our executive or senior level managers at any time to discuss any aspect of our
business. In addition, there generally are frequent opportunities for directors
to meet with other members of our management team.
Corporate Code of Business
Conduct and Ethics
We have
implemented a Code of Business Conduct and Ethics applicable to our directors,
Chief Executive Officer, Chief Financial Officer, other senior management, and
to all of our officers and employees. Our Code of Business Conduct and Ethics
provides fundamental ethical principles to which these senior financial officers
are expected to adhere to. Our Code of Business Conduct and Ethics
operates as a tool to help our directors, officers, and employees understand and
adhere to the high ethical standards required for employment by, or association
with, the Company and the Bank. Our Code of Business Conduct and Ethics is
available on our website at www.ppbi.com/ir. Our
shareholders may also obtain written copies at no cost by writing to us at 1600
Sunflower Avenue, Costa Mesa, California 92626, Attention: Investor Relations
Department, or by calling (714) 431-4000. Any future changes or amendments to
our Code of Business Conduct and Ethics and any waiver that applies to one of
our senior financial officers or a member of our Board of Directors will be
posted to our website.
|
Nominating
& Corporate
|
||
|
Audit
|
Compensation
|
Governance
|
|
Kenneth
A. Boudreau
|
Kenneth
A. Boudreau
|
Kenneth
A. Boudreau
|
|
Jeff
C. Jones
|
John
D. Goddard
|
John
D. Goddard
|
|
Michael
L. McKennon *
|
Ronald
G. Skipper *
|
Ronald
G. Skipper *
|
|
5
meetings held in 2008
|
2
meetings held in 2008
|
1
meeting held in 2008
|
* Chairperson
A
description of the general functions of each of the Company’s Board committees
and the composition of each committee is set forth below.
Audit
Committee. The Audit Committee is responsible for selecting
and communicating with the independent auditors, reporting to the Board on the
general financial condition of the Company and the results of the annual audit,
and ensuring that the Company's activities are being conducted in accordance
with applicable laws and regulations. The internal auditor of the Bank
participates in the Audit Committee meetings. A copy of the audit
committee charter can be found on the Company’s website at www.ppbi.com under the
Investor Relations section.
No member
of the Audit Committee receives any consulting, advisory or other compensation
fee from the Company other than fees for service as member of the Board of
Directors, committee member or officer of the Board. Each of the
Audit Committee members is considered “independent” under the Nasdaq listing
standards and rules of the SEC. The Board of Directors has determined
that Mr. McKennon satisfies the requirements established by the SEC for
qualification as an “audit committee financial expert”.
Compensation
Committee. The Compensation Committee reviews the amount and
composition of director compensation from time to time and makes recommendations
to the Board when it concludes changes are needed. In recommending director
compensation, the Compensation Committee considers the potential negative effect
on director independence if director compensation and perquisites exceed
customary levels. The Compensation Committee also (i) has oversight
responsibility for the Bank’s compensation policies, benefits and practices,
(ii) reviews the Chief Executive Officer’s recommendations concerning individual
incentive awards of officers directly reporting to him, (iii) approves all stock
option and restricted stock grants, (iv) has oversight responsibility for
management planning and succession, and (v) determines the annual salary, the
annual bonus, stock options, and restricted stock grants of the Chief Executive
Officer (“CEO”) and Chief Financial Officer (“CFO”). Our Compensation
Committee does not have a charter.
Nominating and Corporate Governance
Committee. The Nominating Committee has oversight
responsibility for nominating candidates as directors and to determine
satisfaction of independence requirements. The Nominating
Committee has adopted a written charter. A copy of the charter and
the Company’s Corporate Governance policy can both be found on the Company’s
website at www.ppbi.com
under the Investor Relations section.
The
Nominating Committee considers candidates for nomination as director suggested
by its members and other directors of the Company, as well as management and
shareholders. Our Nominating Committee will consider all director
candidates properly submitted by our shareholders in accordance with our
Corporate Governance Guidelines. The Nominating Committee has
authority to retain a third-party search firm to identify or evaluate, or assist
in identifying and evaluating, potential nominees if it so desires, although it
has not done so to date.
In
evaluating nominees for director, the Nominating Committee considers such other
relevant factors as it deems appropriate, including the current composition of
the Board, the need for Audit Committee expertise, the director qualification
guidelines set forth in the Company’s Corporate Governance Policy and the
evaluations of other prospective nominees. In connection with this
evaluation, the Nominating Committee determines whether to interview the
prospective nominee, and if warranted, one or more members of the Nominating
Committee, in concert with the Company’s Chief Executive Officer, interviews
prospective nominees in person or by telephone. After completing its evaluation,
the Nominating Committee makes a recommendation to the full Board as to the
persons who should be nominated by the Board, and the Board determines the
nominees after considering the recommendation and report of the Nominating
Committee.
Compensation Committee
Interlocks and Insider Participation
For 2008,
the Company’s Compensation Committee was comprised of Messrs. Boudreau, Goddard,
and Skipper, each of whom was an independent director. None of these
individuals is or has been an officer or employee of the Company during the last
fiscal year or as of the date of this Proxy Statement or is serving or has
served as a member of the compensation committee of another entity that has an
executive officer serving on the Company’s Compensation Committee. No
executive officer of the Company served as a director of another entity that had
an executive officer serving on the Company’s Compensation
Committee. Finally, no executive officer of the Company served as a
member of the compensation committee of another entity that had an executive
officer serving as a director of the Company.
Committee Independence and
Additional Information
The
Company’s Audit, Nominating and Compensation Committees are currently composed
entirely of “independent” directors, as defined by our Corporate Governance
Guidelines and applicable Nasdaq and SEC rules and regulations. Our Compensation
Committee does not have a written charter; however, our Audit and Nominating
Committees each have a written charter, which may be obtained on our website at
www.ppbi.com/ir.
Company shareholders may also obtain written copies of the charters at no cost
by writing to us at 1600 Sunflower Avenue, Costa Mesa, California 92626,
Attention: Investor Relations Department, or by calling (714)
431-4000.
The Chair
of each committee is responsible for establishing committee agendas. The agenda,
meeting materials and the minutes of each committee meeting are furnished in
advance to all of our directors, and each committee chair reports on his or her
committee’s activities to the full Board.
The
following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as represented by the owner or as
disclosed in certain reports regarding such ownership filed by such persons with
the Company and with the SEC, in accordance with Sections 13(d) and 13(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Other than
those persons listed below, the Company is not aware of any person, as such term
is defined in the Exchange Act, that beneficially owns more than 5% of the
Company’s common stock as of the Record Date.
|
Amount
and
|
|||||||||||||
|
Nature
of
|
|||||||||||||
|
Name
and Address of
|
Beneficial
|
Percent
|
|||||||||||
|
Title
of Class
|
Beneficial
Owner
|
Ownership
|
of
Class (1)
|
||||||||||
|
Common
Stock
|
AWM
Investment Co., Inc.
|
487,716 | (2 | ) | 10.15 | % | |||||||
|
527
Madison Avenue, Suite 2600
|
|||||||||||||
|
New
York, NY 10022
|
|||||||||||||
|
Common
Stock
|
Wellington
Management Co. LLP
|
478,100 | (3 | ) | 9.95 | % | |||||||
|
75
State Street
|
|||||||||||||
|
Boston,
MA 02109-1809
|
|||||||||||||
|
Common
Stock
|
JCSD
Capital, LLC
|
325,000 | (4 | ) | 6.77 | % | |||||||
|
170
Alamo Hills Court
|
|||||||||||||
|
Alamo,
CA 94507
|
|||||||||||||
|
(1)
|
As
of March 31, 2009, there were 4,803,451 shares of Company common stock
outstanding on which “Percent of Class” in the above table is
based.
|
|
(2)
|
As
disclosed on a Schedule 13G/A filed with the SEC on February 13,
2009. The ability of AWM Investment Co., Inc. to vote the shares it holds
in excess of 10% of our outstanding shares of common stock is subject to
the Voting Limitation contained in our certificate of incorporation, as
amended.
|
|
(3)
|
As
disclosed on a Schedule 13G filed with the SEC on February 12,
2007.
|
|
(4)
|
As
disclosed on a Schedule 13G filed with the SEC on August 27,
2008.
|
This table
and the accompanying footnotes provide a summary of the beneficial ownership of
our common stock as of the Record Date, by (i) our directors, (ii) our executive
officers named in Summary Compensation Table and (iii) all of our current
directors and executive officers as a group. The following summary is based on
information furnished by the respective directors and officers.
Each
person has sole voting and investment power with respect to the shares he
beneficially owns.
|
Unvested
|
Total
Beneficial
|
|||||||||||||||||||||||
|
Common
|
Restricted
|
Options
|
Ownership
|
|||||||||||||||||||||
|
Name
|
Stock
|
Stock
|
Exercisable
(1)
|
Warrants
(2)
|
# (3) | % (4) | ||||||||||||||||||
| A | B | C | D | E | F | |||||||||||||||||||
|
Kenneth
A. Boudreau
|
15,175 | - | 3,333 | - | 18,508 | 0.4 | % | |||||||||||||||||
|
John
D. Goddard
|
49,114 | - | 14,333 | - | 63,447 | 1.2 | % | |||||||||||||||||
|
Jeff
C. Jones
|
13,832 | 668 | 3,333 | 16,400 | 34,233 | 0.7 | % | |||||||||||||||||
|
Michael
L. McKennon
|
7,000 | - | 11,333 | - | 18,333 | 0.4 | % | |||||||||||||||||
|
Ronald
G. Skipper
|
35,195 | - | 14,333 | - | 49,528 | 1.0 | % | |||||||||||||||||
|
David
L. Hardin
|
- | - | - | - | - | 0.0 | % | |||||||||||||||||
|
Steven
R. Gardner
|
73,002 | - | 181,667 | - | 254,669 | 5.0 | % | |||||||||||||||||
|
John
Shindler
|
16,748 | - | 47,333 | - | 64,081 | 1.2 | % | |||||||||||||||||
|
Eddie
Wilcox
|
16,432 | - | 46,667 | - | 63,099 | 1.2 | % | |||||||||||||||||
|
Stock
Ownership of all Directors and Executive Officers as a Group (9
persons)
|
226,498 | 668 | 322,332 | 16,400 | 565,898 | 11.0 | % | |||||||||||||||||
|
1)
|
In
accordance with applicable SEC rules, only options that are exercisable
within 60 days after March 31, 2009 are included in this
column.
|
|
2)
|
The
amounts in column D represent warrants to purchase Pacific Premier
Bancorp, Inc. common stock which were purchased by the director
separately.
|
|
3)
|
The amounts in column
E are derived by adding shares, unvested restricted stock, options
exercisable, and warrants listed in columns A, B, C and D of the
table.
|
|
4)
|
The
amounts contained in column F are derived by dividing the amounts in
column E of the table by (i) the total outstanding shares of 4,803,451,
plus (ii) the total amount in column C, plus (iii) the total amount in
column D.
|
Equity
Compensation Plan Information
The following
table provides information as of December 31, 2008, with respect to options
outstanding and available under the Company’s 2000 Stock Incentive Plan and the
Company’s 2004 Long-Term Incentive Plan.
|
Plan
Category
|
Number
of Securities to be Issued Upon Exercise of Outstanding
Options/Warrants
|
Weighted-Average
Exercise Price of Outstanding Options/Warrants
|
Number
of Securities Remaining Available for Future Issuance
|
|||||||||
|
Equity
compensation plans approved by security holders:
|
||||||||||||
|
2000
& 2004 Stock Incentive Plans
|
633,550 | $ | 8.75 | 64,134 | ||||||||
|
Equity
compensation plans not approved by security holders:
|
- | - | - | |||||||||
|
Total
Equity Compensation plans
|
633,550 | $ | 8.75 | 64,134 | ||||||||
The Company’s
Board of Directors, acting upon a recommendation from the Compensation
Committee, annually determines the non-employee directors’ compensation for
serving on the Board and its committees. In establishing director compensation,
the Board and the Compensation Committee are guided by the following
goals:
|
·
|
Compensation
should consist of a combination of cash and equity awards that are
designed to fairly pay the directors for work required for a company of
our size and scope;
|
|
·
|
Compensation
should align the directors’ interests with the long-term interests of
shareholders; and
|
|
·
|
Compensation
should assist with attracting and retaining qualified
directors.
|
The
Compensation Committee of the Company was comprised of Messrs. Boudreau,
Goddard, and Skipper for 2008, each of whom is “independent” as defined under
the Nasdaq listing standards. The Compensation Committee held two meetings
during 2008, at which all members were present. The Compensation
Committee (i) has oversight responsibility for the Bank’s compensation policies,
benefits and practices; (ii) reviews the CEO’s recommendations concerning
individual incentive awards of officers directly reporting to him; (iii)
approves all stock option and restricted stock grants; (iv) has oversight
responsibility for management planning and succession; and (v) determines the
annual compensation amount and the annual bonus, stock option and restricted
stock grants of the CEO and CFO. The Compensation Committee may from
time to time retain independent compensation consultants to assist it in the
exercise of its responsibilities, including developing compensation plans and
providing comparative data regarding the Bank’s compensation
policies.
The
Compensation Committee and Board most recently completed this process in
December 2008, and determined that our director compensation for 2009 should
remain unchanged from 2008. The Company does not pay director
compensation to directors who are also our employees. Below are the elements of
compensation paid to nonemployee directors for their service on our
Board.
Cash
Compensation
Company
non-employee directors receive the following cash payments for their service on
our Board of Directors and Board committees:
|
·
|
a
monthly cash retainer of $500 for service on the Company
Board;
|
|
·
|
a
monthly cash retainer of $2,000 for service on the Bank’s board of
directors;
|
|
·
|
a
monthly cash retainer of $2,500 to the Chairman of the Bank’s board of
directors;
|
|
·
|
a
quarterly cash retainer of $500 to the Chairman of the audit committee of
the Bank;
|
During
2008, the Company did not provide perquisites to any director in an amount that
is reportable under applicable SEC rules and regulations. All non-employee
directors are entitled to reimbursement for travel expense incurred in attending
Board and committee meetings.
Stock
Compensation
Each
non-employee director is eligible for a grant of either options to purchase
Company common stock or shares of restricted stock issued from our 2004
Long-term Incentive Plan, as recommended by our Compensation Committee. The
options and restricted stock that the Company awards to our directors vest in
equal thirds over three years on each anniversary of the date of grant, subject
to earlier vesting on termination of service in certain
circumstances. All awards are made based on the closing market price
on the date of grant.
Long-Term Care Insurance
Plan
As more
fully described under the heading “Long-Term Care Insurance” of “Executive
Compensation” below, the Bank implemented in September 2006 a Long-Term Care
Insurance Plan for the named executive officers and directors of the Bank. The
non-employee directors may elect not to participate in the insurance plan. For
those who opt out, the amount of the insurance premium, up to $4,000 annually,
will be recorded each month to their deferred compensation account with
interest. The deferred liability at December 31, 2008 was $23,985. The total
amount deferred for 2008 was $9,498 and the expense for 2008 was $1,062 for this
plan.
In
accordance with applicable SEC rules and regulations, the following table
reports all compensation the Company paid during 2008 to its non-employee
directors.
|
2008
DIRECTOR COMPENSATION
|
||||||||||||||||||||||||||||
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Awards
($)
|
Option
Awards
($)
(2)
|
Non-Equity
Incentive Plan Compensation ($)
|
Change
in Nonqualified Deferred Compensation Earnings ($)(3)
|
All
Other Compensation ($)
|
Total
($)
|
|||||||||||||||||||||
|
Kenneth
A. Boudreau (1)
|
30,000 | - | 60,500 | - | - | - | 90,500 | |||||||||||||||||||||
|
John
D. Goddard
|
30,000 | - | 60,500 | - | 117 | - | 90,617 | |||||||||||||||||||||
|
David
L. Hardin
|
15,000 | - | 24,200 | - | - | - | 39,200 | |||||||||||||||||||||
|
Jeff
C. Jones
|
30,000 | - | 60,500 | - | 117 | - | 90,617 | |||||||||||||||||||||
|
Michael
L. McKennon (1)
|
32,000 | - | 60,500 | - | 44 | - | 92,544 | |||||||||||||||||||||
|
Ronald
G. Skipper
|
36,000 | - | 60,500 | - | - | - | 96,500 | |||||||||||||||||||||
|
1)
|
Mr.
McKennon started deferring a portion of his Board fees in September
2006. Mr. Boudreau started deferring a portion of his
Board fees in January 2008. The deferment program allows a
director to defer their normal monthly Board fees into an account that
earns the rate of prime plus one percent. At December 31, 2008,
Mr. McKennon had deferred $34,000 and had earned $3,491 on that deferment
and Mr. Boudreau had deferred $24,000 and had earned $634 on that
deferment.
|
|
2)
|
Each
of Messrs. Boudreau, Goddard, Hardin, Jones, McKennon, and Skipper were
awarded options to purchase 5,000 shares of common stock on January 2,
2008 at $7.10 per share. Upon his resignation from the Board in
March 2008, the unvested options that had been granted to Mr. Hardin
terminated. Each of Messrs. Boudreau, Goddard, Jones, McKennon, and
Skipper were awarded options to purchase 5,000 shares of common stock on
August 27, 2008 at $5.01 per share. Mr. Hardin rejoined the
Board in August 2008 and was awarded options to purchase 5,000 shares of
common stock on October 20, 2008 at $4.24 per share. As of
December 31, 2008, our non-employee directors held the following options
to purchase shares of common stock: (1) Mr. Boudreau held options to
purchase 15,000 shares of common stock of which options to purchase 1,667
shares of common stock were vested; (2) Mr. Goddard held options to
purchase 26,000 shares of common stock of which options to purchase 12,667
shares of common stock were vested; (3) Mr. Hardin held options to
purchase 5,000 shares of common stock of which options to purchase zero
shares of common stock were vested; (4) Mr. Jones held options to purchase
15,000 shares of common stock of which options to purchase 1,667 shares of
common stock were vested; (5) Mr. McKennon held options to purchase 23,000
shares of common stock of which options to purchase 9,667 shares of common
stock were vested; and (6) Mr. Skipper held options to purchase 26,000
shares of common stock of which options to purchase 12,667 shares of
common stock were vested.
|
|
3)
|
Represents
the above market earnings in fiscal year 2008. Above market earnings
represent earnings greater than 120% of the 10-year Treasury Note during
2008.
|
Deferred Compensation
Plan
The Bank
created a Directors’ Deferred Compensation Plan in September 2006 which allows
non-employee directors to defer Board of Directors’ fees and provides for
additional contributions from any opt-out portion of the Long-Term Care
Insurance Plan. See “Long-Term Care Insurance Plan” under “Executive
Compensation” below. The deferred compensation is credited with interest by the
Bank at prime plus one percent and the accrued liability is payable upon
retirement or resignation. The Directors’ Deferred Compensation Plan
is unfunded. The Company is under no obligation to make matching
contributions to the Directors’ Deferred Compensation Plan. As of December 31,
2008, the unfunded liability for the plan was $62,000 and the interest expense
for 2008 was $2,386.
|
2008
NONQUALIFIED DIRECTOR DEFERRED COMPENSATION
|
||||||||||||||||||||||||
|
Name
|
Aggregate
Balance at Fiscal Year-End Prior to Last Fiscal Year-End
($)
|
Director
Contributions in Last Fiscal Year ($)
|
Long-Term
Care Insurance Plan Opt Out Contributions in Last Fiscal Year
($)
|
Aggregate
Earnings in Last Fiscal Year ($)
|
Aggregate
Withdrawls/
Distributions
($)
|
Aggregate
Balance at Last Fiscal Year-End ($)
|
||||||||||||||||||
|
Kenneth
A. Boudreau
|
- | 24,000 | - | 634 | - | 24,634 | ||||||||||||||||||
|
John
D. Goddard
|
5,649 | - | 4,000 | 117 | - | 9,766 | ||||||||||||||||||
|
David
L. Hardin
|
- | - | - | - | - | - | ||||||||||||||||||
|
Jeff
C. Jones
|
5,649 | - | 4,000 | 117 | - | 9,766 | ||||||||||||||||||
|
Michael
L. McKennon
|
25,866 | 12,000 | 1,498 | 1,796 | - | 41,160 | ||||||||||||||||||
|
Ronald
G. Skipper
|
- | - | - | - | - | - | ||||||||||||||||||
EXECUTIVE
COMPENSATION
The following
discussion and analysis of compensation arrangements of our named executive
officers for 2008, which we refer to as the CD&A, should be read together
with the compensation tables and related disclosures set forth
below. This discussion contains forward-looking statements that are
based on our current plans, considerations, expectations and determinations
regarding future compensation programs. The Compensation Committee
may adopt from time to time additional compensation arrangements or modify
current compensation arrangements with our named executive officers based upon
its evaluation of the need for such modifications to achieve the objectives of
our compensation program discussed below.
Compensation Philosophy and
Objectives
This
CD&A provides an overview and analysis of our compensation program and
policies, the material decisions we have made under those programs and policies
with respect to our named executive officers, and the material factors we
considered in making those decisions. We discuss within this CD&A
the various elements included in executive compensation and how we determined
those elements. We also discuss the roles of the Compensation
Committee and our CEO in this process.
We
believe that the most effective executive compensation program is one that
enables us to attract, retain and motive our named executive officers to achieve
the Company’s long-term and strategic goals. We intend for our
compensation program to align executives’ interests with those of the
shareholders by rewarding performance for implementing the Company’s various
strategies, with the ultimate goal of improving shareholder value. We
evaluate both performance and compensation to ensure that we maintain our
ability to attract and retain employees in key positions, and to ensure that
compensation provided to key employees keeps these employees focused on
franchise value creation.
The
principle elements for our compensation program are: (1) base salary, (2) annual
discretionary cash incentive awards, (3) long-term equity incentive awards, (4)
retirement plans and other benefits, and (5) other executive benefits, such as
perquisites and severance benefits. Our named executive officers for
2008 consist of Steven R. Gardner, our CEO, John Shindler, our CFO, and Eddie
Wilcox, our Chief Banking Officer (“CBO”). We refer to Messrs.
Gardner, Shindler and Wilcox in this Proxy Statement as our Named Executive
Officers.
Process for Making
Compensation Decisions
Roles of the Compensation Committee
and Compensation Consultants. The Compensation Committee
reviews and makes decisions with respect to salaries, cash incentives, equity
incentives and employee benefits for our Named Executive
Officers. The Compensation Committee has the authority to engage
consultants as necessary and to request other information as needed to fairly
measure, monitor and control the overall compensation of the Named Executive
Officers. The Compensation Committee did not use the services of a
compensation consultant in determining compensation for the Named Executive
Officers for 2008
Role of Executive Officers in
Compensation Decisions. The Compensation Committee makes the
compensation decisions for the Named Executive Officers as set forth in the
Summary Compensation Table below. The CEO reviews the performance of
the CFO and CBO annually and makes recommendations on salary adjustments and
annual award amounts, which are presented to the Compensation
Committee. The Compensation Committee then exercises its discretion
and modifies any recommendations, adjustments, or awards to the CFO and CBO, to
align any such adjustment or award with the overall compensation philosophies of
the Company.
Elements of
Compensation
For
fiscal year ended December 31, 2008, the principal elements of compensation for
the Named Executive Officers were:
|
·
|
Base
salary;
|
|
·
|
Annual
discretionary cash incentive
awards;
|
|
·
|
Long-term
equity incentive awards,
|
|
·
|
Retirement
plans and other benefits; and
|
|
·
|
Other
executive benefits, such as perquisites and severance
benefits.
|
Base
Salary
The
Company provides the Named Executive Officers and all other employees with base
salary to compensate them for services rendered during the fiscal
year. Base salary ranges for the Named Executive Officers are
determined by using market assessments and internal evaluations for each
executive based on his position, experience, anticipated contributions and
responsibilities.
As part
of its review of base salaries for the Named Executive Officers, the
Compensation Committee considers:
|
·
|
market
data provided by public proxy information which may be confirmed or
reviewed by independent sources;
|
|
·
|
scope
of the roles, duties and responsibilities of the executive and the impact
these duties have on both the short and long term performance of the
Company; and
|
|
·
|
individual
performance of the executive.
|
Employment
Agreements. As more fully described below, in December 2007,
the Company entered into employment agreements with each of our Named Executive
Officers. We believe employment agreements serve a number of
functions, including (1) retention of our Named Executive Officers;
(2) mitigation of any uncertainty about future employment and continuity of
management in the event of a change in control; and (3) protection of the
Company and customers through confidentiality and non-solicitation
covenants. Except as determined by the terms of the employment
agreements with our Named Executive Officers, salary levels are typically
reviewed annually as part of the Company’s performance review process as well as
upon a promotion or other change in job responsibility.
Incentive
Compensation
The
Company’s incentive compensation is designed to provide cash (short-term) and
equity-based (long-term) incentive compensation to:
|
·
|
promote
high performance on a risk adjusted basis and achievement of the our
strategic plans by our Named Executive Officers and key
employees;
|
|
·
|
encourage
the growth of shareholder value;
and
|
|
·
|
allow
key employees to participate as an equity shareholder in the long-term
growth and profitability of the
Company.
|
Annual Incentive Cash
Awards. The
Compensation Committee oversees establishment of annual discretionary incentive
cash awards that are designed to motivate short-term performance and retain
talent. In 2008, the Compensation Committee discussed if there was a need
to establish specific performance targets for the awarding of the discretionary
cash award and concluded that annual incentives for executives based on specific
performance targets was not be in the best interest of the shareholders.
Instead, the Compensation Committee focused on both the Company’s performance
compared to select peer banks performance, as well as the Named Executive
Officers’ performance in light of the key areas of implementation of the
strategic plan such as new business account acquisition, new relationship
account growth, core deposit growth, loan portfolio diversification, loan
quality, as well as the overall risk mitigation and management practices. Upon
completing their review, the Committee decided to reduce the level of incentive
due to the overall decline in net income from the prior year taking into
consideration the onetime charges associate with the Other Than Temporary
Impairment charges associated with mark to market accounting of the Bank’s
securities portfolio.
The
Compensation Committee analyzed the Bank’s financial performance compared to the
Company’s strategic plan and the peer banks and referenced the increasingly
challenging environment for financial institutions. The Compensation
Committee discussed the growth in business accounts and business banking
relationships as well as the change in the composition of the loan
portfolio. The Compensation Committee also discussed the specific
performance of Mr. Gardner and the Bank for the past year and the transition of
the Bank to a commercial banking business model. When determining Mr.
Gardner’s discretionary cash award, the Compensation Committee took into
consideration all components of Mr. Gardner’s compensation including his use of
a Company owned vehicle, the payment of his life insurance premium, health
benefits, Salary Continuation Plan, and total cash
compensation.
Based on its analysis, the Compensation Committee approved the following discretionary incentive cash awards for the Named Executive Officers for 2008, which were paid in January 2009, in the amount of $265,000 for the CEO, $50,000 for the CFO and $90,000 for the CBO.
Long-Term Equity Incentive
Awards. We maintain the 2004 Long-term Incentive Plan, under
which we are permitted to grant incentive stock options, restricted stock grants
and stock appreciation rights. Each Named Executive Officer is
eligible for equity incentive awards under the 2004 Long-term Incentive Plan, as
determined by the Compensation Committee. The options and restricted
stock that the Company awards to our Named Executive Officers vest in equal
thirds over three years on each anniversary of the date of grant, subject to
earlier vesting on termination of service in certain
circumstances. All awards are made based on the closing market price
on the date of grant.
The
Compensation Committee believes it is important that the Named Executive
Officers’ and employees’ interests are aligned with shareholders and to provide
long term incentive to achieve the Company’s goals and attract and retain
talented executive officers. In discussing the grant of equity
incentive awards to the Named Executive Officers for 2008, the Compensation
Committee concluded, consistent with its determination of the annual
discretionary incentive cash awards discussed above, that because of the
Company’s strategic transition to a commercial banking platform, financial
measures for the grants of equity awards were less relevant for 2008 than would
be during a period of non-transition. The
Committee also noted the fact that the Named Executive Officers have made open
market purchases of the Company’s stock from time to time and thus have
continued o commit personal cash toward the support of the Company’s
stock.
For 2008,
the Compensation Committee approved the issuance to our Named Executive Officers
of 125,000 options to purchase shares of the Company’s common stock that were
issued on January 2, 2008 and August 27, 2008, as follows:
|
·
|
CEO
– options in the aggregate to purchase 60,000 shares of common
stock;
|
|
·
|
CFO
– options in the aggregate to purchase 22,500 shares of common stock;
and
|
|
·
|
CBO
– options in the aggregate to purchase 42,500 shares of common
stock.
|
Retirement Plans and Other
Benefits
The Bank
provides one tax-qualified, broadly-based Employee Savings Plan (the “401(k)
Plan”), to all employees and management of the Bank. Under the 401(k) Plan,
employees may contribute from 1% to 50% of their compensation. In
2008, the Bank matched 100% of contributions for the first three percent
contributed and 50% on the next two percent contributed. The
amounts of contributions made to the 401(k) Plan by the Bank were approximately
$186,000 for the year ended December 31, 2008, for all employees of the Bank and
$27,179 to executives named in the Summary Compensation Table. See
“All Other Compensation” below.
In
addition, the Bank implemented in 2006 a non-qualified supplemental retirement
plan or the Salary Continuation Plan for the CEO and CFO. The Salary
Continuation Plan is an unfunded plan and the Company is under no obligation to
fund the Salary Continuation Plan. The amount expensed in 2008 under
the Salary Continuation Plan amounted to an aggregate of $111,098, of which
$58,641 was for Mr. Gardner and $52,457 was for Mr. Shindler. As
of December 31, 2008, $290,397 was recorded in other liabilities on the
consolidated statements of condition for this plan. See “Salary
Continuation Plan” under “Nonqualified Deferred Compensation”
below.
Also in
September 2006, the Bank implemented a Long-Term Care Insurance Plan for the
named executive officers. The 2008 expense for this plan for the three executive
officers was $7,421. See “Long-Term Care Insurance Plan” under
“Nonqualified Deferred Compensation” below.
Additionally
the Company provides Mr. Gardner, per his employee agreement, a life insurance
policy in the amount of $1.5 million and short-term disability
policy. See “All Other Compensation” below.
Perquisites and Other
Personal Benefits
The
Company provides perquisites and other personal benefits that the Company and
the Compensation Committee believe are reasonable and consistent with the
Company’s overall compensation objectives of attracting and retaining superior
employees for key positions. The Compensation Committee annually reviews the
levels of perquisites and other personal benefits provided to the CEO, CFO and
CBO.
Perquisites
provided for the CEO, CFO, or CBO may include, but are not limited to, the use
of Company automobiles, auto allowance, travel and transportation
accommodations, entertainment expenses, participation in the plans and programs
described above.
Attributed
costs of the perquisites received by the above individuals for the fiscal year
2008 are included in the “All Other Compensation” column and related footnotes
of the “Summary Compensation Table” below.
Employment
Arrangements
Given the
state of our industry and their leadership position with the Company or the
Bank, the Company and the Bank have entered into an employment agreement with
Mr. Gardner and the Bank has entered into employment agreements with each of
Messrs. Shindler, and Wilcox, the terms of which are summarized
below.
Gardner Employment
Agreement. Mr. Gardner, the Company and the Bank entered into an
Employment Agreement dated December 19, 2007, also referred to here as the
Gardner Agreement, which provides for the employment of Mr. Gardner as the
President and CEO of the Company and the Bank. The Gardner Agreement
has a term of three (3) years and, on each annual anniversary date, the term
automatically is extended for an additional one-year period by the Company’s and
the Bank’s boards of directors, unless Mr. Gardner, on the one hand, or the
Company or the Bank, on the other hand, gives written notice to the other party
of its election not to extend the term of the Gardner Agreement, with such
notice to be given not less than ninety (90) days prior to any such anniversary
date. If notice is given by either party, then the Gardner Agreement
will terminate at the conclusion of its remaining term.
Pursuant
to the Gardner Agreement, Mr. Gardner will receive a minimum base salary of
$375,000 per year, which may be increased from time to time in such amounts as
may be determined by the Company’s and the Bank’s boards of
directors. In addition, Mr. Gardner will be eligible for a
discretionary performance bonus not to exceed 125% of his base salary, based on
his individual performance and the overall performance of the Company and the
Bank, with eligibility and the amount of any such bonus to be at the discretion
of Compensation Committee of each of the Company’s and the Bank’s boards of
directors. Mr. Gardner also receives the use of an automobile paid
for by the Company. Mr. Gardner is entitled to participate in any
pension, retirement or other benefit plan or program given to employees and
executives of the Company and the Bank, to the extent commensurate with Mr.
Gardner’s then duties and responsibilities as fixed by the boards of directors
of the Company and the Bank. Under the terms of the Gardner
Agreement, the Company and the Bank are required to maintain a life insurance
policy for Mr. Gardner in the amount of $1.5 million, with the beneficiary(ies)
designated by Mr. Gardner.
Pursuant
to the Gardner Agreement, the Company and the Bank have the right, at any time
upon prior notice of termination, to terminate Mr. Gardner’s employment for any
reason, including, without limitation, termination for cause or disability, as
each term is defined in the Gardner Agreement, and Mr. Gardner has the right,
upon prior notice of termination, to terminate his employment with the Company
and the Bank for any reason. As detailed in “Potential Payments Made
upon Termination or Change-in-Control” below, Mr. Gardner may be entitled to
certain payments if he is terminated or resigns for good reason.
The
Gardner Agreement does not affect the benefits that Mr. Gardner is entitled to
receive pursuant to the Salary Continuation Agreement between Mr. Gardner and
the Bank dated May 17, 2006.
Shindler Employment
Agreement. Mr. Shindler and the Bank entered into an
Employment Agreement dated December 19, 2007, also referred to here as the
Shindler Agreement, that provides for the employment of Mr. Shindler as the
Executive Vice President and CFO of the Bank. The Shindler Agreement has a term
of three (3) years, and, on each annual anniversary date, the term automatically
is extended for an additional one-year period by the Bank’s board of directors,
unless either Mr. Shindler or the Bank gives written notice to the other party
of its election not to extend the term of the Shindler Agreement, with such
notice to be given not less than ninety (90) days prior to any such anniversary
date. If notice is given by either party, then the Shindler Agreement
will terminate at the conclusion of its remaining term.
Pursuant
to the Shindler Agreement, Mr. Shindler will receive a minimum base salary of
$190,000 per year, which may be increased from time to time in such amounts as
may be determined by the Bank’s board of directors. In addition, Mr. Shindler
will be eligible for a discretionary performance bonus not to exceed 50% of his
base salary, based on his individual performance and the overall performance of
the Bank, with eligibility and the amount of any such bonus to be at the
discretion of the Compensation Committee of the Bank’s board of
directors. Mr. Shindler is also entitled to participate in any
pension, retirement or other benefit plan or program given to employees and
executives of the Bank, to the extent commensurate with Mr. Shindler’s then
duties and responsibilities as fixed by the board of directors of the
Bank.
Pursuant
to the Shindler Agreement, the Bank will have the right, at any time upon prior
notice of termination, to terminate Mr. Shindler’s employment for any reason,
including, without limitation, termination for cause or disability, as each term
is defined in the Shindler Agreement, and Mr. Shindler has the right, upon prior
notice of termination, to terminate his employment with the Bank for any
reason. As detailed in “Potential Payments Made upon Termination or
Change-in-Control” below, Mr. Shindler may be entitled to certain payments if he
is terminated or resigns for good reason.
The
Shindler Agreement will not affect the benefits that Mr. Shindler is entitled to
receive pursuant to the Salary Continuation Agreement between Mr. Shindler and
the Bank dated May 17, 2006.
Wilcox Employment
Agreement. Mr. Wilcox and the Bank entered into an Employment
Agreement dated December 19, 2007, also referred to here as the Wilcox
Agreement, that provides for the employment of Mr. Wilcox as the Executive Vice
President and CBO of the Bank. The Wilcox Agreement has a term of three (3)
years, and, on each annual anniversary date, the term automatically is extended
for an additional one-year period by the Bank’s board of directors, unless
either Mr. Wilcox or the Bank gives written notice to the other party of its
election not to extend the term of the Wilcox Agreement, with such notice to be
given not less than ninety (90) days prior to any such anniversary date. If
notice is given by either party, then the Wilcox Agreement will terminate at the
conclusion of its remaining term.
Pursuant
to the Wilcox Agreement, Mr. Wilcox will receive a minimum base salary of
$215,000 per year, which may be increased from time to time in such amounts as
may be determined by the Bank’s board of directors. In addition, Mr.
Wilcox will be eligible for a discretionary performance bonus not to exceed 100%
of his base salary, based on his individual performance and the overall
performance of the Bank, with eligibility and the amount of any such bonus to be
at the discretion of the Compensation Committee of the Bank’s board of
directors. Mr. Wilcox receives a car allowance of $500 per
month. Mr. Wilcox is entitled to participate in any pension,
retirement or other benefit plan or program given to employees and executives of
the Bank, to the extent commensurate with Mr. Wilcox’s then duties and
responsibilities as fixed by the board of directors of the Bank.
Pursuant
to the Wilcox Agreement, the Bank will have the right, at any time upon prior
notice of termination, to terminate Mr. Wilcox’s employment for any reason,
including, without limitation, termination for cause or disability, as each term
is defined in the Wilcox Agreement, and Mr. Wilcox has the right, upon prior
notice of termination, to terminate his employment with the Bank for any
reason. As detailed in “Potential Payments Made upon Termination or
Change-in-Control” below, Mr. Wilcox may be entitled to certain payments if he
is terminated or resigns for good reason.
Salary Continuation
Agreements
As more
fully discussed in “Salary Continuation Plan” under “Nonqualified Deferred
Compensation” below, we have established a Salary Continuation Plan for our CEO
and CFO that provides for certain annual benefits for them following their
retirement from the Company, and that provides for the acceleration of their
benefits upon their termination due to a change-in-control, as that term is
define in the plan.
Administration of the
Company’s Compensation Program
The
Company monitors its compensation program through the Compensation
Committee. The Compensation Committee ensures that the total
compensation paid to the Company’s Named Executive Officers are appropriate
given the Company’s compensation goals and philosophies, as well as the skill
sets and abilities of each individual recipient. The Company, through the
Compensation Committee, endeavors to ensure that that the compensation and
benefits of the Named Executive Officers are appropriate as compared to similar
executive officers within the banking industry.
The
Compensation Committee’s responsibilities are to:
|
·
|
establish
the base salary, incentive compensation and any other compensation for the
Company’s CEO and; review and approve the base salary, incentive
compensation and other compensation for the CFO and the CBO in
consultation with the Company’s
CEO;
|
|
·
|
monitor
the Company’s management incentive and equity-based compensation plans,
retirement and benefit plans and discharge the duties imposed on the
Compensation Committee by the terms of those plans;
and
|
|
·
|
perform
other functions or duties deemed appropriate by the
Board.
|
Compensation
decisions for our Named Executive Officers and the non-employee Directors are
made by the Compensation Committee.
Accounting and Tax
Considerations - Equity-Based Compensation
The
Compensation Committee also considers the tax and accounting treatment of the
various components of compensation, and although these considerations do not
generally drive its decisions, the Compensation Committee generally strives to
put the Company in the best position with respect to tax and accounting
treatment. In particular, the Compensation Committee attempts to ensure that
compensation to Named Executive Officers is deductible under Section 162(m) of
the Internal Revenue Code, although the Compensation Committee has reserved the
right to provide compensation to Named Executive Officers that is not deductible
for income tax purposes as circumstances warrant.
The
Compensation Committee of the Board of Directors has reviewed and discussed the
Compensation Discussion and Analysis set forth in this Proxy Statement with
management. Based on this review and discussion, the Compensation
Committee has recommended to the Board that the Compensation Discussion and
Analysis be included in this Proxy Statement.
COMPENSATION
COMMITTEE
Ronald G. Skipper,
Chair
Kenneth A.
Boudreau
John D.
Goddard
The
following table shows the compensation of our Named Executive Officers for
services to the Company or the Bank during the years ended December 31, 2008,
2007and 2006, respectively.
|
2008
SUMMARY COMPENSATION TABLE
|
|||||||||||||||||||||||||||||||||
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
(1)
|
Stock
Awards
($) (2)
|
Option
Awards
($)
(3)(4)
|
Non-Equity
Incentive Plan Compensation ($) (5)
|
Change
in Nonqualified Deferred Compensation Earnings ($)
|
All
Other Compensation ($) (6)
|
Total
($)
|
||||||||||||||||||||||||
|
Steven
R. Gardner
|
2008
|
373,558 | 265,000 | - | 352,850 | 58,641 | - | 29,513 | 1,079,562 | ||||||||||||||||||||||||
|
President
and Chief
|
2007
|
300,000 | 330,000 | - | 302,500 | 52,809 | - | 16,898 | 1,002,207 | ||||||||||||||||||||||||
|
Executive
Officer
|
2006
|
300,000 | 300,000 | 87,885 | - | 39,309 | - | 53,493 | 780,687 | ||||||||||||||||||||||||
|
John
Shindler
|
2008
|
190,000 | 50,000 | - | 123,175 | 52,457 | - | 13,628 | 429,260 | ||||||||||||||||||||||||
|
Executive
Vice President and
|
2007
|
150,000 | 75,000 | - | 60,500 | 47,304 | - | 8,514 | 341,318 | ||||||||||||||||||||||||
|
Chief
Financial Officer
|
2006
|
150,000 | 60,000 | 23,436 | - | 35,211 | - | 18,281 | 286,928 | ||||||||||||||||||||||||
|
Eddie
Wilcox
|
2008
|
215,000 | 90,000 | - | 265,175 | - | - | 16,934 | 587,109 | ||||||||||||||||||||||||
|
Executive
Vice President and
|
2007
|
200,000 | 100,000 | - | 121,000 | - | - | 13,056 | 434,056 | ||||||||||||||||||||||||
|
Chief
Banking Officer
|
2006
|
175,000 | 125,000 | 29,295 | - | - | - | 24,533 | 353,828 | ||||||||||||||||||||||||
________________
|
(1)
|
Discretionary
incentive cash awards earned in 2007 were paid in
2008. Discretionary incentive cash awards earned in 2008 were
paid in 2009.
|
|
(2)
|
Stock
awards include restricted stock shares awarded on February 16,
2006. The grant price was $11.727 per share. Mr.
Gardner was awarded 7,500 shares, Mr. Shindler was awarded 2,000 shares,
and Mr. Wilcox was awarded 2,500 shares. All of these
restricted stock shares became fully vested on February 16,
2009.
|
|
(3)
|
Option
awards include options which were awarded on January 2, 2008 at a grant
price was $7.10 per share and on August 27, 2008 at a grant price was
$5.01 per share. Mr. Gardner was awarded options to purchase
25,000 and 35,000, respectively, shares of common stock; Mr. Shindler was
awarded options to purchase 5,000 and 17,500, respectively, shares of
common stock; and Mr. Wilcox was awarded options to purchase 25,000 and
17,500, respectively, shares of common
stock.
|
|
(4)
|
Options
granted in 2008 were determined pursuant to FAS 123R as detailed below in
this Proxy Statement.
|
|
(5)
|
Non-equity
Incentive Plan Compensation included amounts as detailed in “Salary
Continuation Plan.”
|
|
(6)
|
All
Other Compensation is detailed in the section “All Other Compensation”
below.
|
Stock
Awards
The
Company made no awards of stock in 2008.
Option
Awards
In 2008,
the Company granted options to purchase a total of 265,750 shares of common
stock to its Directors, Executives and key employees. All options
granted in 2008 were valued based on the aggregate grant date fair value of the
award determined pursuant to FAS 123R with the following
assumptions:
|
Assumptions
|
||||||||||||||||||||||||||||
|
Number
|
Grant
|
Fair
Market
|
||||||||||||||||||||||||||
|
Grant
|
of
Options
|
Price
|
Dividend
|
Risk
Free
|
Expected
|
Value
at Grant
|
||||||||||||||||||||||
|
Date
|
Granted
|
Per
Share
|
Yield
|
Volatility
|
Rate
|
Life
(Years)
|
Per
Share
|
|||||||||||||||||||||
|
1/2/2008
|
117,750 | $ | 7.10 | -- | 29.28 | % | 3.89 | % | 10.00 | $ | 2.57 | |||||||||||||||||
|
8/27/2008
|
135,500 | $ | 5.01 | -- | 56.36 | % | 3.96 | % | 10.00 | $ | 2.81 | |||||||||||||||||
|
10/20/2008
|
5,000 | $ | 4.24 | -- | 63.41 | % | 3.91 | % | 10.00 | $ | 2.57 | |||||||||||||||||
|
11/3/2008
|
5,000 | $ | 4.25 | -- | 66.23 | % | 3.96 | % | 10.00 | $ | 2.65 | |||||||||||||||||
|
12/10/2008
|
2,500 | $ | 4.49 | -- | 61.30 | % | 2.69 | % | 10.00 | $ | 2.59 | |||||||||||||||||
Non-Equity Incentive
Compensation
The
Company’s non-equity incentive compensation consists solely of discretionary
cash bonuses paid to the Named Executive Officers as described in “Annual
Incentive Cash Awards” above. In the case of Mr. Gardner, the
non-equity incentive compensation cannot exceed 125% of his base salary per his
employment agreement.
All Other
Compensation
The
amount of All Other Compensation reported for each Named Executive Officer in
the Summary Compensation Table above consisted of the following:
|
ALL
OTHER COMPENSATION
|
|||||||||||||||||||||
|
Name
and Principal Position
|
Year
|
401(K)
Contributions
($)
|
Auto
($)
(1)
|
Group
Term
Life
($)
|
Other
Insurance
($)
(2)
|
Total
($)
|
|||||||||||||||
|
Steven
R. Gardner
|
2008
|
9,200 | 6,948 | 585 | 12,780 | 29,513 | |||||||||||||||
|
President
and Chief
|
|
- | |||||||||||||||||||
|
Executive
Officer
|
|
||||||||||||||||||||
|
John
Shindler
|
2008
|
9,379 | - | 386 | 3,863 | 13,628 | |||||||||||||||
|
Executive
Vice President and
|
|
||||||||||||||||||||
|
Chief
Financial Officer
|
|
||||||||||||||||||||
|
Eddie
Wilcox
|
2008
|
8,600 | 4,800 | 198 | 3,336 | 16,934 | |||||||||||||||
|
Executive
Vice President and
|
|
||||||||||||||||||||
|
Chief
Banking Officer
|
|
||||||||||||||||||||
|
1)
|
Mr.
Gardner has the use of a Company-leased vehicle and this amount represents
the personal use by Mr. Gardner. Mr. Wilcox received an annual
auto allowance of $4,800.
|
|
2)
|
Mr.
Gardner is covered under a separate $1.5 million life insurance policy,
for which the Bank pays $698.70 every six months. The Bank pays
for a Short Term Disability policy for Mr. Gardner which costs $1,728
annually.
|
Grants
of Plan-Based Awards in 2008
The table
below shows all plan-based awards that the Company made during 2008 to the Named
Executive Officers.
|
2008
GRANTS OF PLAN-BASED AWARDS
|
||||||||||||||
|
Name
|
Grant
Date
|
Approval
Date (2)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price
of
Option Awards ($/sh)
|
Grant
Date
Fair
Value of
Option
Awards
($)
(1)
|
|||||||||
|
(a)
|
(b)
|
(j)
|
(k)
|
(k)
|
||||||||||
|
Steven
R. Gardner
|
1/2/2008
|
12/17/2007
|
25,000 | $ | 7.10 | 70,209 | ||||||||
|
President
and Chief
|
8/27/2008
|
8/27/2008
|
35,000 | $ | 5.01 | 89,925 | ||||||||
|
Executive
Officer
|
||||||||||||||
|
John
Shindler
|
1/2/2008
|
12/17/2007
|
5,000 | $ | 7.10 | 14,042 | ||||||||
|
Executive
Vice President and
|
8/27/2008
|
8/27/2008
|
17,500 | $ | 5.01 | 44,963 | ||||||||
|
Chief
Financial Officer
|
||||||||||||||
|
Eddie
Wilcox
|
1/2/2008
|
12/17/2007
|
25,000 | $ | 7.10 | 70,209 | ||||||||
|
Executive
Vice President and
|
8/27/2008
|
8/27/2008
|
17,500 | $ | 5.01 | 44,963 | ||||||||
|
Chief
Banking Officer
|
||||||||||||||
|
1)
|
The
fair value of options granted in 2008 was determined pursuant to FAS 123R
as detailed under “Option Awards” above in this Proxy
Statement.
|
|
2)
|
On
December 17, 2007, our Compensation Committee approved the issuance of the
following options to purchase shares of common stock to our Named
Executive Officers, which were granted on January 2, 2008: (i)
Mr. Gardner – 25,000; (ii) Mr. Shindler – 5,000; and (iii) Mr. Wilcox –
25,000. On August 27, 2008, our Compensation Committee approved the
issuance of the following options to purchase shares of common stock to
our Named Executive Officers, which were granted on August 27,
2008: (i) Mr. Gardner – 35,000; (ii) Mr. Shindler – 17,500; and
(iii) Mr. Wilcox – 17,500
|
In 2008
the Company made only stock option grants to the Named Executive Officers. There
were no restricted stock grants made during the year ended December 31,
2008 to the Named Executive Officers.
Outstanding
Equity Awards at the end of 2008
This table
shows the equity awards that have been previously awarded to each of the Named
Executive Officers and which remained outstanding as of December 31,
2008.
|
2008
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||||||||||||||||||||||||||
|
Option
Awards
|
Stock
Awards
|
||||||||||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested ($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested ($)
|
||||||||||||||||||||||||
|
Steven
R. Gardner
|
20,000 | - | - | $ | 18.13 |
7/7/2010
|
2,500 | $ | 10,000 | - | - | ||||||||||||||||||||||
|
President
and
|
20,000 | - | - | $ | 3.44 |
1/2/2011
|
- | - | - | - | |||||||||||||||||||||||
|
Chief
Executive
|
25,000 | - | - | $ | 5.85 |
12/19/2012
|
- | - | - | - | |||||||||||||||||||||||
| Officer | 25,000 | - | - | $ | 10.54 |
12/10/2013
|
- | - | - | - | |||||||||||||||||||||||
| 75,000 | - | - | $ | 10.65 |
6/30/2014
|
- | - | - | - | ||||||||||||||||||||||||
| 8,325 | - | 16,675 | $ | 12.10 |
1/3/2017
|
- | - | - | - | ||||||||||||||||||||||||
| - | - | 25,000 | $ | 7.10 |
1/2/2018
|
- | - | - | - | ||||||||||||||||||||||||
| - | - | 35,000 | $ | 5.01 |
8/27/2018
|
- | - | - | - | ||||||||||||||||||||||||
|
John
Shindler
|
4,000 | - | - | $ | 4.38 |
12/18/2010
|
667 | $ | 2,668 | - | - | ||||||||||||||||||||||
|
Executive
Vice
|
10,000 | - | - | $ | 5.85 |
12/19/2012
|
- | - | - | - | |||||||||||||||||||||||
|
President
and
|
5,000 | - | - | $ | 10.54 |
12/10/2013
|
- | - | - | - | |||||||||||||||||||||||
| Chief Financial | 5,000 | - | - | $ | 10.65 |
6/30/2014
|
- | - | - | - | |||||||||||||||||||||||
| Officer | 20,000 | - | - | $ | 13.39 |
12/31/2014
|
- | - | - | - | |||||||||||||||||||||||
| 1,665 | - | 3,335 | $ | 12.10 |
1/3/2017
|
- | - | - | - | ||||||||||||||||||||||||
| - | - | 5,000 | $ | 7.10 |
1/2/2018
|
- | - | - | - | ||||||||||||||||||||||||
| - | - | 17,500 | $ | 5.01 |
8/27/2018
|
- | - | - | - | ||||||||||||||||||||||||
|
Eddie
Wilcox
|
10,000 | - | - | $ | 7.47 |
8/4/2013
|
833 | $ | 3,332 | - | - | ||||||||||||||||||||||
|
Executive
Vice
|
5,000 | - | - | $ | 10.54 |
12/10/2013
|
- | - | - | - | |||||||||||||||||||||||
|
President
and
|
25,000 | - | - | $ | 10.65 |
6/30/2014
|
- | - | - | - | |||||||||||||||||||||||
| Chief Banking | 3,330 | - | 6,670 | $ | 12.10 |
1/3/2017
|
- | - | - | - | |||||||||||||||||||||||
| Officer | - | - | 25,000 | $ | 7.10 |
1/2/2018
|
- | - | - | - | |||||||||||||||||||||||
| - | - | 17,500 | $ | 5.01 |
8/27/2018
|
- | - | - | - | ||||||||||||||||||||||||
Exercised
Options and Vested Restricted Stock in 2008
During 2008 a
total of 10,567 shares of the total outstanding restricted stock
vested. The table below lists the number of shares and realized value
for the Named Executive Officers. There were no options exercised
during 2008.
|
2008
OPTIONS EXERCISES AND STOCK VESTED
|
||||||||||||||||
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($)
|
||||||||||||
|
Steven
R. Gardner
|
- | - | 2,500 | $ | 18,775 | |||||||||||
|
President
and
|
||||||||||||||||
|
Chief
Executive Officer
|
||||||||||||||||
|
John
Shindler
|
- | - | 667 | $ | 5,009 | |||||||||||
|
Executive
Vice President and
|
||||||||||||||||
|
Chief
Financial Officer
|
||||||||||||||||
|
Eddie
Wilcox
|
- | - | 833 | $ | 6,256 | |||||||||||
|
Executive
Vice President and
|
||||||||||||||||
|
Chief
Banking Officer
|
||||||||||||||||
Pension
Benefits
The Company has no
pension benefits plans.
Nonqualified
Deferred Compensation
The Company
offers two nonqualified defined contribution plans: the Director’s Deferred
Compensation Plan and the Salary Continuation Plan. During 2008, none
of the Named Executive Officers withdrew any amounts from the plans listed in
the table below. Currently the Company only offers deferred
compensation to its Board of Directors under the Director’s Deferred
Compensation Plan as more fully described under “Director Compensation in 2008”
above in this Proxy Statement. The Company does not offer deferred
compensation to the Named Executive Officers at this time.
Salary Continuation
Plan
In 2006, the
Bank implemented a non-qualified supplemental retirement plan for our CEO and
CFO. Because the Salary Continuation Plan is an unfunded plan, the
Company is under no obligation to fund the Salary Continuation
Plan. The Salary Continuation Plan, as outlined in the Salary
Continuation Agreements between the Bank and each of our CEO and CFO, provides
for the annual benefit of $150,000 for our CEO and $75,000 for our CFO, which is
to be paid out in twelve (12) equal monthly installments commencing on the first
day of the month following normal retirement at age 62. The annual
benefit shall be distributed to the executive for fifteen (15)
years.
The amount
expensed in 2008 under the Salary Continuation Plan amounted to
$58,641 for Mr. Gardner and $52,457 for Mr.
Shindler. As of December 31, 2008, $290,397 was recorded in other
liabilities on the consolidated statements of condition for this Salary
Continuation Plan. The Salary Continuation Plan was accounted for in
accordance with SFAS No. 158 as of December 31, 2008.
|
2008
NONQUALIFIED SALARY CONTINUATION PLAN
|
||||||||||||||||||||
|
Name
|
Aggregate
Balance at Fiscal Year-End Prior to Last Fiscal Year-End
($)
|
Registrant
Contributions in Last Fiscal Year ($)
|
Aggregate
Earnings in Last Fiscal Year ($)
|
Aggregate
Withdrawls/
Distributions
($)
|
Aggregate
Balance at Last Fiscal Year-End ($)
|
|||||||||||||||
|
Steven
R. Gardner
|
94,738 | 58,641 | - | - | 153,379 | |||||||||||||||
|
President
and
|
||||||||||||||||||||
|
Chief
Executive Officer
|
||||||||||||||||||||
|
John
Shindler
|
84,561 | 52,457 | - | - | 137,018 | |||||||||||||||
|
Executive
Vice President and
|
||||||||||||||||||||
|
Chief
Financial Officer
|
||||||||||||||||||||
Long-Term
Care Insurance Plan
In September
2006, the Bank implemented the Long-Term Care Insurance Plan for the Named
Executive Officers and non-employee directors of the Bank. The non-employee
directors may elect not to participate in the insurance plan. For those who opt
out, the amount of the insurance premium, up to $4,000 annually, is recorded
each month to their deferred compensation account with interest. The expense for
2008 was $32,031 for the Long-Term Care Insurance Plan.
|
2008
LONG-TERM CARE INSURANCE
|
||||
|
Name
|
Premiums
Paid and/or Contributions to by Registrant ($)
|
|||
|
Kenneth
A. Boudreau
|
5,357 | |||
|
John
D. Goddard
|
4,000 | |||
|
David
L. Hardin
|
3,907 | |||
|
Jeff
C. Jones
|
4,000 | |||
|
Michael
L. McKennon
|
2,502 | |||
|
Ronald
G. Skipper
|
3,998 | |||
|
Total
Directors
|
23,764 | |||
|
Steven
R. Gardner
|
2,502 | |||
|
John
Shindler
|
3,452 | |||
|
Eddie
Wilcox
|
1,467 | |||
|
Total
Named Executives
|
7,421 | |||
|
Total
Long-Term Care Insurance
|
31,185 | |||
Potential
Payments Made Upon Termination or a Change-in-Control
As described
in “Employment Arrangements” under “Compensation Discussion and Analysis” above
in this Proxy Statement, each of our Named Executive Officers is party to an
employment agreement with us, which provides the executives with benefits in the
event of certain terminations of employment. In addition, each of
Messrs. Gardner and Shindler is a party to a Salary Continuation Agreement,
which also provides them with benefits in the event of certain terminations of
employment.
Employment
Agreements
As previously
discussed in “Employment Arrangements” under “Compensation Discussion and
Analysis” above, on December 19, 2007 we entered into employment agreements
with our Named Executive Officers. The following describes payments
due to the Named Executive Officers under their respective employment agreements
following their termination of employment with us.
Termination for Cause; Resignation
without Disability or Good Reason. If an executive is
terminated for cause or resigns without disability or good reason, as such terms
are defined in the employment agreements, he will receive only his base salary
accrued through the date of termination or death. In this event, no
special severance benefits are payable.
Termination as a Result of
Disability; Death. If an executive is terminated as a result
of disability or death during the term of employment, the executive will receive
the lesser of (i) his base salary as in effect as of the date of termination,
multiplied by one year, or (ii) his base salary for the duration of the term of
his employment agreement.
Termination other than for Cause,
Disability or Death; Resignation by the Executive Due to Our Material Breach or
Following a Change of Control. If (i) an executive is
terminated by us other than for cause, disability or his death, or (ii) an
executive terminates the employment agreement due to (A) our material breach of
the employment agreement, or (B) without his express written consent, (1) a
material reduction by us of his functions, duties or responsibilities, (2) a
material reduction by us of his base salary, or (3) our requirement that he be
based at a location more than 50 miles from Costa Mesa, California, and the
termination by the executive occurs within two (2) years following the initial
occurrence of the breach or the good cause reason basis for termination, the
executive will be entitled to a lump sum cash payment equal to his base salary
as in effect immediately prior to the date of termination plus his incentive
bonus for the previous year with respect to Mr. Shindler, and with respect to
Mr. Gardner, that same amount multiplied by three (3) years. Under
the terms of Mr. Gardner’s employment agreement only, if his employment with us
is terminated as described in the previous sentence, then Mr. Gardner is
entitled to participate, at no cost to him, in all group insurance, life
insurance, health and accident, disability and other employee benefit plans,
programs and arrangements in which he was entitled to participate immediately
prior to the date of termination (other than any of our stock option or other
stock compensation plans or bonus plans), for a period ending at the earlier of
(i) the third anniversary of the date of termination, and (ii) the date of his
full-time employment by another employer, provided that in the event Mr.
Gardner’s participation in any such plan, program or arrangement is barred, we
must arrange to provide him with benefits substantially similar to those he was
entitled to receive under such plans, programs and arrangements prior to the
date of termination.
In
receiving any of the foregoing payments, the Named Executive Officers are not be
obligated to seek other employment or to mitigate in any way the amounts payable
to them as set forth above, and such amounts will not be reduced or terminated
whether or not an executive obtains other employment.
Each
employment agreement also provides that the severance payments and benefits will
be modified or reduced by the amount, if any, which is the minimum necessary to
result in no portion of the payments and benefits payable being subject to an
excise tax under the “golden parachute” provisions under Section 280G of
the Internal Revenue Code or subject to the excise tax imposed under Section
4999 of the Internal Revenue Code.
Restrictive
Covenants
The
employment agreements require each executive to refrain from soliciting
employees of the Company for a two-year period after termination of employment.
The agreements limit the executives’ ability to disclose or use any of the
Company’s confidential information, trade secrets or business
opportunities.
Salary
Continuation Agreements
The
following describes the Salary Continuation Agreements that we entered into with
each of our Named Executive Officers on April 1, 2006, which still are in
effect.
Early Termination other than due to
Change in Control, Death, Disability or for Cause. In the
event of an early termination of an executive’s employment agreement, which
termination results other than from a change in control, disability or cause, as
such terms are defined in the Salary Continuation Agreements, the executive will
receive one hundred percent (100%) of the accrual balance, as defined in the
Salary Continuation Agreements, determined as of the end
of the month preceding the termination payable in twelve (12) equal monthly
installments for a period of fifteen (15) years.
Disability
Benefit. In the event an executive’s employment is terminated
due to disability, the executive will receive one hundred percent (100%) of the
accrual balance determined as of the end of the month preceding the termination
payable in twelve (12) equal monthly installments for a period of fifteen (15)
years.
Change in Control Benefit.
Upon a change of control, followed within twelve (12) months by a termination of
an executive’s employment agreement, the executive will receive a lump sum
amount equal to the present value of the stream of one hundred eighty (180)
monthly payments of $12,500 each for Mr. Gardner and $6,250 each for Mr.
Shindler; provided that, in the event this amount is subject to
federal excise taxes under the “golden parachute” provisions under
Section 280G of the Internal Revenue Code, the payments will be reduced or
delayed to the extent it would not be an excess parachute payment.
Death
Benefit. In the event an executive dies while employed
by us, his beneficiary will receive a lump sum amount equal to the present value
of the stream of one hundred eighty (180) monthly payments of $12,500 each for
Mr. Gardner and $6,250 each for Mr. Shindler.
Summary
of Potential Termination Payments
The
following table reflects the value of termination payments and benefits that
each of our named executive officers would receive under the employment
agreements and Salary Continuation Agreements, as applicable, which were in
place on December 31, 2008, if they had terminated employment on
December 31, 2008 under the circumstances shown. The table does not include
accrued salary and benefits, or certain amounts that the named executive
officers would be entitled to receive under certain plans or arrangements that
do not discriminate in scope, terms or operation, in favor of our executive
officers and that are generally available to all salaried
employees.
|
Officer
|
Severance
($)
|
Insurance
Benefits
($)
|
Salary
Continuation
Plan
($)
|
Equity
Accelerated
Vesting
($)
|
Total
($)
|
|||||||||||||||||||
|
Mr. Gardner
|
||||||||||||||||||||||||
|
Termination
for Cause or
Resignation without
Disability
or Good Reason
|
- | - | 153,379 |
(5)
|
- | 153,379 | ||||||||||||||||||
|
Death
|
375,000 |
(1)
|
1,500,000 | 1,488,700 |
(4)
|
11,250 | (8) | 3,374,950 | ||||||||||||||||
|
Disability
|
375,000 |
(1)
|
36,000 | 153,379 |
(5)
|
11,250 | (8) | 575,629 | ||||||||||||||||
|
Retirement
|
- | - | 2,250,000 | (6) | 11,250 | (8) | 2,261,250 | |||||||||||||||||
|
Change
of Control
|
- | - | - | 10,000 | (9) | 10,000 | ||||||||||||||||||
|
Termination
without Cause, or
Resignation
Due to Our Material Breach
|
1,170,000 |
(2)
|
90,685 |
(3)
|
153,379 | (5) | - | 1,414,064 | ||||||||||||||||
|
Termination
in connection with a
Change
in Control
|
1,170,000 |
(2)
|
90,685 |
(3)
|
1,778,932 | (7) | - | 3,039,617 | ||||||||||||||||
|
Mr. Shindler
|
||||||||||||||||||||||||
|
Termination
for Cause or
Resignation without
Disability
or Good Reason
|
- | - | 137,018 | (5) | - | 137,018 | ||||||||||||||||||
|
Death
|
190,000 |
(1)
|
- | 744,350 | (4) | - | (8) | 934,350 | ||||||||||||||||
|
Disability
|
190,000 |
(1)
|
- | 137,018 | (5) | - | (8) | 327,018 | ||||||||||||||||
|
Retirement
|
- | - | 1,125,000 | (6) | - | (8) | 1,125,000 | |||||||||||||||||
|
Change
of Control
|
- | - | - | 2,668 | (9) | 2,668 | ||||||||||||||||||
|
Termination
without Cause, or
Resignation
Due to Our Material Breach
|
240,000 |
(2)
|
- | 137,018 | (5) | - | 377,018 | |||||||||||||||||
|
Termination
in connection with a
Change
in Control
|
240,000 |
(2)
|
- | 889,466 | (7) | - | 1,129,466 | |||||||||||||||||
|
Mr. Wilcox
|
||||||||||||||||||||||||
|
Termination
for Cause or
Resignation without
Disability
or Good Reason
|
- | - | - | - | - | |||||||||||||||||||
|
Death
|
215,000 | (1) | - | - | - | (8) | 215,000 | |||||||||||||||||
|
Disability
|
215,000 | (1) | - | - | - | (8) | 215,000 | |||||||||||||||||
|
Retirement
|
- | - | - | - | (8) | - | ||||||||||||||||||
|
Change
of Control
|
- | - | - | 3,332 | (9) | 3,332 | ||||||||||||||||||
|
Termination
without Cause, or
Resignation
Due to Our Material Breach
|
305,000 | (2) | - | - | - | 305,000 | ||||||||||||||||||
|
Termination
in connection with a
Change
in Control
|
305,000 | (2) | - | - | - | 305,000 | ||||||||||||||||||
_________________________
|
(1)
|
With
respect to termination due to disability or death, represents an amount
equal to the lesser of (i) his base salary as in effect as of the date of
termination, multiplied by one year, or (ii) his base salary for the
duration of the term of his employment agreement.
|
|
(2)
|
For
Mr. Gardner represents a cash severance amount equal to the executive’s
base salary as in effect immediately prior to the date of termination,
plus his incentive bonus for the previous year multiplied by three (3)
years, to be paid in a lump sum. For Mr. Shindler and Mr. Wilcox
represents a cash severance amount equal to the executive’s base salary as
in effect immediately prior to the date of termination, plus his incentive
bonus for the previous year, to be paid in a lump sum. The
foregoing severance amounts will be modified or reduced pursuant to
Sections 280G or 4999 of the Internal Revenue Code (as applicable) as more
fully described above under “Employment Agreements."
|
|
(3)
|
Represents
the incremental cost to the Company resulting in Mr. Gardner’s
participation, at no cost to him, in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs
and arrangements in which he was entitled to participate immediately prior
to the date of termination (other than any stock option or other stock
compensation plans or bonus plans of us), for a period ending at the
earlier of (i) the third anniversary of the date of termination, and (ii)
the date of his full-time employment by another employer, provided that in
the event Mr. Gardner’s participation in any such plan, program or
arrangement is barred, we must arrange to provide him with benefits
substantially similar to those he was entitled to receive under such
plans, programs and arrangements prior to the date of
termination.
|
|
(4)
|
Represents
in the case of Mr. Gardner, a lump sum amount equal to the present value
of the stream of one hundred eighty (180) monthly payments of $12,500
each, and in the case of Mr. Shindler a lump sum amount equal to the
present value of the stream of one hundred eighty (180) monthly payments
of $6,250 each.
|
|
(5)
|
Represents
an amount equal to one hundred percent (100%) of the accrual balance, as
defined in the Salary Continuation Agreements, determined as of the end of
the month preceding the termination payable in twelve (12) equal monthly
installments for a period of fifteen (15) years.
|
|
(6)
|
Represents
in the case of Mr. Gardner $150,000 payable annually in twelve (12) equal
monthly installments for a period of fifteen (15) years, and in the case
of Mr. Shindler $75,000 payable annually in twelve (12) equal monthly
installments for a period of fifteen (15) years.
|
|
(7)
|
Upon
a change of control, followed within twelve (12) months by a termination
of an executive’s employment agreement, represents, in the case Mr.
Gardner, a lump sum amount equal to the present value of the stream of one
hundred eighty (180) monthly payments of $12,500 each, and in the case of
Mr. Shindler, a lump sum amount equal to the present value of the stream
of one hundred eighty (180) monthly payments of $6,250
each; provided that, in the event this amount is subject to
federal excise taxes under the “golden parachute” provisions under
Section 280G of the Internal Revenue Code, the payments will be
reduced or delayed to the extent it would not be an excess parachute
payment.
|
|
(8)
|
Reflects
the dollar value of unexercisable options that become exercisable upon the
occurrence of termination due to death, disability or retirement pursuant
to the terms of out 2004 Long-Term Incentive Plan. The dollar
value of the vested of stock options were determined by calculating the
closing price of the Company’s common stock on December 31, 2008 less the
option exercise price, and multiplying that by the number of shares for
each award at the end of year 2008.
|
|
(9)
|
Reflects
the dollar value of unvested restricted common stock that becomes vested
upon the occurrence of a change of control pursuant to the terms of a
restricted stock agreement between the Named Executive Officer and the
Company. The dollar value of the vested restricted stock awards
were determined by calculating the closing price of the Company’s common
stock on December 31, 2008, and multiplying that by the number of shares
for each award at the end of year
2008.
|
Transactions
with Certain Related Persons
It is the
policy of the Company that all permissible transactions between the Company and
its executive officers, directors, holders of 10% or more of the shares of any
class of its common stock and affiliates thereof, contain terms no less
favorable to the Company than could have been obtained by it in arm's-length
negotiations with unaffiliated persons and are required to be approved by a
majority of independent outside directors of the Company not having any interest
in the transaction.
Indebtedness
of Management
No Company
executive officer or director was indebted to the Company or its subsidiaries in
an amount greater than $120,000 at any time since the beginning of our last
fiscal year that ended December 31, 2008 and the beginning of the fiscal year
ended December 31, 2007, except Mr. McKennon who personally guaranteed, along
with his two partners, four loans that their partnership, McKennon Wilson &
Morgan, LLP, has outstanding with the Bank with an aggregate amount of $120,000
or more. All such loans were made in the ordinary course of business, did not
involve more than normal risk of collectability or present other unfavorable
features, and were made on substantially the same terms, including interest
rates and collateral requirements, as those prevailing at the same time for
comparable loan transactions with unaffiliated persons. As of December 31,
2008, the loans to McKennon Wilson & Morgan, LLP were not classified as a
non-accrual, past due, restructured or potential problem
loans.
During the
fiscal year ended December 31, 2007, the Bank made one loan in March of 2007, to
the partnership of Moore Stephens Wurth Frazer and Torbet, LLP, of which Jeff C.
Jones, a director of the Company, is a partner. The loan was made in
the ordinary course of business, did not involve more than normal risk of
collectability or present other unfavorable features, and was made on
substantially the same terms, including interest rates and collateral
requirements, as those prevailing at the same time for comparable loan
transactions with unaffiliated persons. As of January 17, 2008, the
loan to Moore Stephens Wurth Frazer and Torbet, LLP was paid in full and closed
and was not classified as a non-accrual, past due, restructured or a potential
problem loan.
Pursuant
to Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
related rules and regulations, our directors and executive officers and any
beneficial owners of more than 10% of any registered class of our equity
securities, are required to file reports of their ownership, and any changes in
that ownership, with the SEC. Based solely on our review of copies of these
reports and on written representations from such reporting persons, we believe
that during 2008 all such persons filed all ownership reports and reported all
transactions on a timely basis.
The
Company’s independent auditors for its fiscal year ended December 31, 2008 were
VTD, independent public accountants. The Audit Committee of the Board
of Directors considered the qualifications and experience of VTD, and, in
consultation with the Board of Directors of the Company, appointed them as
independent auditors for the Company for the current fiscal year which ends
December 31, 2009. Although ratification of our independent auditors
by shareholders is not required by law, the Audit Committee and Board of
Directors desire to obtain the shareholders’ ratification of such
appointment. If ratification of VTD as our independent auditors is
not approved by shareholders, the matter will be referred to the Audit Committee
for further review.
Representatives
of VTD will be present at the Annual Meeting of Shareholders, will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions submitted to the Secretary of the Company in
advance of the Annual Meeting.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE
“FOR” THE RATIFICATION OF THE APPOINTMENT OF VAVRINEK, TRINE, DAY & CO., LLP
AS
THE COMPANY’S INDEPENDENT AUDITOR.
FEES
Aggregate
fees for professional services rendered to the Company by VTD for the years
ended December 31, 2008 and 2007 were as follows:
|
2008
|
2007
|
|||||||
|
Audit
fees
|
$ | 105,000 | $ | 111,000 | ||||
|
Audit-related
fees
|
10,000 | 10,000 | ||||||
|
Audit
and audit-related fees
|
115,000 | 121,000 | ||||||
|
Tax
compliance fees
|
16,000 | 17,000 | ||||||
|
All
other fees
|
15,000 | 14,000 | ||||||
|
Total
fees
|
$ | 146,000 | $ | 152,000 | ||||
Audit
Fees
Audit
fees are related to the audit of the Company’s annual financial statements for
the years ended December 31, 2008 and 2007, and for the reviews of the financial
statements included in the Company’s quarterly reports on Form 10-Q and 10-K for
those years.
Audit-Related
Fees
Audit-related
fees for each of 2008 and 2007 included fees for audits of the Company’s 401(k)
plan.
Tax Fees
Tax fees
in both 2008 and 2007 consisted of tax compliance services in preparation of the
Company’s tax returns filed with the Internal Revenue Service and various state
tax agencies.
All Other
Fees
All other
fees for 2008 included fees paid related to internal control procedures and
internal compliance with management’s assessment of internal
controls.
Audit
Committee Pre-Approval Policies and Procedures
The Audit
Committee has adopted a policy that requires advance approval of all audit,
audit-related, tax services and other services performed by the independent
auditor. The policy provides for pre-approval by the Audit Committee
of specified audit and non-audit services. Unless the specific service has been
previously pre-approved with respect to that year, the Audit Committee must
approve the permitted service before the independent auditor is engaged to
perform it.
In 2008,
100% of Audit-Related Fees, Tax Fees and All Other Fees were pre-approved by the
Audit Committee.
The
report of the Audit Committee shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended (the “Securities Act”), or
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Audit
Committee has reviewed and discussed the audited financial statements for fiscal
year 2008 with management and with the independent auditors. Specifically, the
Audit Committee has discussed with the independent auditors the matters required
to be discussed by SAS 61, as amended by SAS 114 (Codification of Statements on
Auditing Standards, AU Section 380), which includes, among other
things:
|
·
|
Methods
used to account for significant unusual
transactions;
|
|
·
|
The
effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or
consensus;
|
|
·
|
The
process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor’s conclusions regarding
the reasonableness of those estimates;
and
|
|
·
|
Disagreements
with management over the application of accounting principles, the basis
for management’s accounting estimates and the disclosures in the financial
statements.
|
|
·
|
The
Audit Committee has received the written disclosures and the letter from
the Company’s independent accountants, VTD, required by Independence
Standards Board Standard No. 1, Independence Discussions with
Audit Committee. Additionally, the Audit Committee has discussed
with VTD, the issue of its independence from the Company. Based on its
review of the audited financial statements and the various discussions
noted above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2008.
The Audit Committee also recommended the appointment of VTD as the
Company’s independent accountants for the year ending December 31,
2009.
|
AUDIT
COMMITTEE
Michael L. McKennon,
Chair
Kenneth A.
Boudreau
Jeff C.
Jones
ANNUAL
REPORT
A copy of
our Annual Report on Form 10-K for the year ended December 31, 2008, including
financial statements and schedules, accompanies this Proxy
Statement.
Additional copies of the Annual
Report on Form 10-K for the year ended December 31, 2008 may be obtained without charge by
writing to Investor Relations, Pacific Premier Bancorp, Inc., 1600 Sunflower
Avenue, Costa Mesa, California 92626. This Proxy Statement and our Annual
Report on Form 10-K for the year ended December 31, 2008, are also available at
our website, www.ppbi.com/ir and from the
SEC at its website, www.sec.gov.
HOUSEHOLDING
The SEC
has adopted rules that permit companies and intermediaries, such as brokers, to
satisfy delivery requirements for Proxy Statements with respect to two or more
shareholders sharing the same address by delivering a single Proxy Statement
addressed to those shareholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for shareholders and cost
savings for companies. We and some brokers household proxy materials, delivering
a single Proxy Statement to multiple shareholders sharing an address unless
contrary instructions have been received from the affected shareholders. Once
you have received notice from your broker or us that they or us will
be householding materials to your address, householding will continue
until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in householding and would prefer to
receive a separate Proxy Statement, or if you are receiving multiple copies of
the Proxy Statement and wish to receive only one, please notify your broker or
nominee if your shares are held in a brokerage account or other account or our
agent, American Stock Transfer & Trust Co., if you hold registered shares.
You can notify American Stock Transfer & Trust Co. by sending a written
request to: American Stock Transfer & Trust Co., 59 Maiden Lane, New York,
NY 10038, or by calling American Stock Transfer & Trust Co., at (800)
937-5449.
Under the
rules of the SEC and our bylaws, shareholder proposals that meet certain
conditions may be included in our Proxy Statement and form of proxy for a
particular annual meeting if they are presented to us in accordance with the
following:
|
·
|
Shareholder
proposals intended to be considered for inclusion in next year’s Proxy
Statement for the 2010 Annual Meeting of Shareholders must be received by
the Company by December 18, 2009, which is one hundred twenty (120) days
prior to the date that we released the Proxy Statement to our shareholders
for the 2009 Annual Meeting of
Shareholders.
|
|
·
|
Shareholders
that intend to present a proposal at our 2010 Annual Meeting of
Shareholders, but not to include the proposal in our Proxy Statement, must
give notice of the proposal to us on or before February 25, 2010, which is
ninety (90) days prior to the tentative date of the 2010 Annual Meeting of
Shareholders of May 26, 2010, to be considered timely under our
bylaws.
|
|
·
|
If
the date of the 2010 Annual Meeting is held on a date more than 30
calendar days from May 26, 2010, notice of a proposal must be
received by us a reasonable time before we begin to print and mail our
proxy materials to be considered for inclusion in our Proxy Statement and
form of proxy relating to that
meeting.
|
|
·
|
Pursuant
to Rule 14a-4(c)(1) promulgated under the Exchange the proxies designated
by us for the 2009 Annual Meeting will have discretionary authority to
vote with respect to any proposal received after March 3, 2009, which is
forty-five (45) days before the date on which the Company first sent the
proxy materials for the 2009 Annual Meeting of Shareholders. In
addition, our bylaws provide that any matter to be presented at the 2009
Annual Meeting must be proper business to be transacted at the Annual
Meeting or a proper nomination to be decided on at the Annual Meeting and
must have been properly brought before such meeting pursuant to our
bylaws.
|
|
·
|
Any
proposal by shareholders must include the shareholder’s name and address,
as they appear on the Company’s record of shareholders, a brief
description of the proposed business, the reason for conducting such
business at the Annual Meeting, the class and number of shares of the
Company’s capital stock that are beneficially owned by such shareholder
and any material interest of such shareholder in the proposed business. In
the case of nominations to the Board of Directors, certain information
regarding the nominee must be
provided.
|
|
·
|
Receipt
by us of any proposal from a qualified shareholder in a timely manner will
be included in the 2010 Proxy Statement if they comply with certain rules
and regulations promulgated by the SEC and the procedures set forth in our
bylaws.
|
|
·
|
Our
Secretary must receive shareholder proposals or nominations in writing at
the executive offices of the Company at 1600 Sunflower Avenue, Costa Mesa,
California 92626, Attention:
Secretary.
|
No notice
that a shareholder intends to present a proposal at the Company’s 2009 Annual
Meeting of Shareholders was received by the Company on or before February
26, 2009, which is
ninety (90) days before the 2009 Annual Meeting of
Shareholders.
The Board of Directors knows of no business that will be presented for consideration at the Annual Meeting other than as stated in the Notice of Annual Meeting of Shareholders. If, however, other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote the shares represented thereby on such matters in accordance with their best judgment.
Whether
or not you intend to be present at the Annual Meeting, you are urged to promptly
return your proxy card or vote via telephone or the Internet. If you
are present at the Annual Meeting and wish to vote your shares in person, your
original proxy may be revoked by voting at the Annual Meeting. However, if you
are a shareholder whose shares are not registered in your own name, you will
need appropriate documentation from your record-holder to vote personally at the
Annual Meeting.
By Order of the Board
of Directors,
John
Shindler
Corporate
Secretary
Executive Vice
President
Costa Mesa,
California
April 17,
2009
ANNUAL
MEETING OF SHAREHOLDERS OF
PACIFIC
PREMIER BANCORP, INC.
May
27, 2009
PROXY VOTING
INSTRUCTIONS
MAIL
- If you
received printed materials, mark, sign and date your proxy card and return it in
the enclosed postage-paid envelope. If you did not receive a printed
proxy card and wish to vote by mail, you may do so by requesting a paper copy of
the proxy materials (as described in the Notice and Proxy Statement), which will
include a proxy card.
- OR -
TELEPHONE
- Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign countries and follow the instructions.
Have your proxy card available when you call.
You will be prompted to enter your control number, located on this proxy card,
and then follow the instructions given.
- OR -
INTERNET
- Access “www.voteproxy.com”
and follow
the on-screen instructions. Have your proxy card
available when you access the web page.
- OR -
IN
PERSON - You may vote your shares in person by
attending the Annual Meeting. If you hold your shares in a brokerage account or
in another nomineed form, to vote in person must obtain a proxy from your broker
or the nominee.
| You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from foreign countries or www.voteproxy.com up until 11:59 PM Eastern Time the day before the cut-off or meeting date. |
Please
detach along perforated line and mail in the envelope provided IF you are not
voting via telephone or the Internet.
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS. PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE
|
x |
1. The
election as directors of the nominees listed (except as marked to the
contrary
below).
Nominees
o
David L. Hardin
o John
D. Goddard
o
FOR ALL NOMINEES
o
WITHHOLD AUTHORITY FOR
ALL NOMINEES
o FOR
ALL EXCEPT
(See
instructions below)
INSTRUCTIONS:
To withhold authority to vote for any
individual nominee(s), mark “FOR
ALL EXCEPT” and write the nominee's name in the space
provided below:
(Write that nominee's name in the space provided
below)
2. The
ratification of the appointment of Vavrinek, Trine, Day & Co., LLP
as independent auditors of Pacific Premier Bancorp, Inc. for
the fiscal year ending December 31, 2009.
| FOR | AGAINST | ABSTAIN |
| o | o | o |
This
proxy is revocable and will be voted as directed, but if no instructions
are
specified, this proxy will be voted FOR each of the proposals listed. If
any
other business is presented at the Annual Meeting of Shareholders, including
whether or not to adjourn the meeting, this proxy will be voted by those
named in this proxy in their best judgment. At the present time, the
Board
of Directors knows of no other business to be presented at the Annual
Meeting
of Shareholders.
The
undersigned acknowledges receipt from the Company prior to the execution
of this
proxy of a Notice of Annual Meeting of Shareholders and of a Proxy Statement
dated April 17, 2009.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE PROPOSALS. THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Sharedholders to be Held on May 27, 2009:
The
Notice, Proxy Statement, and Annual Report are available at
www.ProxyVote.com.
FOLD AND
DETACH HERE
REVOCABLE
PROXY
PACIFIC
PREMIER BANCORP, INC.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
May 27,
2009
9:00
a.m., Pacific Time
The undersigned hereby appoints the
official proxy committee of the Board of Directors of Pacific Premier Bancorp,
Inc. (the "Company"), each with full power of substitution, to act as attorneys
and proxies for the undersigned, and to vote all shares of common stock of the
Company which the undersigned is entitled to vote only at the Annual Meeting of
Shareholders to be held on May 27, 2009 at 9:00 a.m., Pacific Time, at the
corporate headquarters of Pacific Premier Bank located at 1600 Sunflower Avenue,
Costa Mesa, California 92626, and at any and all adjournments thereof, as
indicated on the back of this proxy.
This proxy is revocable and will be voted
as directed, but if no instructions are specified, this proxy will be voted FOR
each of the proposals listed. If any other business is presented at
the Annual Meeting of Shareholders, including whether or not to adjourn the
meeting, this proxy will be voted by those named in this proxy in their best
judgment. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting of
Shareholders.
The undersigned acknowledges receipt from
the Company prior to the execution of this proxy of a Notice of Annual Meeting
of Shareholders and of a Proxy Statement dated April 17,
2009.